aos 1 Flashcards
(22 cards)
what is microeconomics
looks into behavior of individual businesses and consumer within a set market
macroeconomics
looks into behavior of whole nation. more generalized approach to explain how one factor may influence entire country
positive economics
statements that can be tested to see if they’re true or false e.g evidence employed to justify
normative economics
relates to statements that are subjective - cannot be verified as true or false
needs
essential for survival
would die without a need e.g food, water, shelter
wants
non-essential for survival
a person can live without but would like to improve quality of living
resources factors
labor - people
land - natural resources
capital - machines
concept of relative scarcity
needs and wants are unlimited while resource are limited
any particular point, we can only produce limited amount of goods and services
opportunity cost
value that is forgone / benefits that have been sacrificed once we use resources in a certain way
represents potential benefits that individual misses out on when choosing alternative
Tradeoffs
situation where making one choice means losing other potential options, usually forgoing a benefit
tradeoffs and opportunity are different
difference between trade off and opportunity cost
opportunity costs look at loss of next best alternative whereas trade offs look at all other alternatives
three basic economics questions
what to produce
how to produce
for whom
market systems
market capitalist economy
planned socialist economy
planned capitalist economy
market socialist economy
market capitalist economy
economic system where prices for good and services are set freely by the forces of supply and demand and are expected by its supporters to balance without intervention of government policy
planned socialist economy
planned economy where entire national economy in socialist society develops in planned / proportionate way.
planned capitalist economy
planned economy where most companies operating in state economy where capitalist dictate trade laws and government to take decisions about production and distribution
market socialist economy
represents a compromise between socialist planning and free enterprise where enterprises are publicly owned but production and consumption are guided by market forces other than government planning
mixed economy
combines aspects of both capitalism and socialism that protects private property and allows a level of economic freedom in the use of capital also allowing government intervention in economic activities in order to achieve social aims
material living standards
ability to access goods and services
ability - purchasing power / buy products on limited income
assumed any increase in consumption of goods and services indicate improved material living standards with a more fulfilling life
ways to measure material living standards
REAL GDP
REAL GDP PER CAPITA
non material living standards
cannot be measured in dollar teams / intangible
e.g environmental quality / physical mental health, life expectancy, crime rate
economic agents
household/individuals
firms
govenrments
central banks
