CH.1 FIVE FOUNDATIONS OF ECONOMICS Flashcards

1
Q

The study of how individuals and societies allocate their limited resources to satisfy their nearly unlimited wants

A

Economics

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

The study of individual units that make up the economy such as households and businesses.

A

Microeconomics

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

The study of overall aspects and workings of an economy, such as inflation, growth, employment, interest rates, and the productivity of the economy as a whole.

A

Macroeconomics

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What are the Five Foundations of Economics?

A
Incentives
Trade-offs
Opportunity cost
Marginal thinking
The principle that trade creates value
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Factors that motivate you to act or exert effort are?

A

Incentives

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Exist when a decision-maker has to choose a course of action.

A

Trade-offs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Highest valued alternative that must be sacrificed to get something else.

A

Opportunity cost

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

It requires the decision-maker to weigh the extra benefits against the extra cost

A

Marginal thinking

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is Circular Flow and what two groups are in it?

A

Circular flow shows how resources and final goods and services flow through the economy.

households & firms

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Voluntary exchange of goods and services between two or more parties.

A

Trade

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

This refers to the situation in which an individual, business, or country can produce at a lower opportunity cost than a competitor can.

A

Comparative advantage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Involves an individual trading they already have or providing a service in exchange for something they want.

A

Barter

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Occurs when each party in an exchange transaction has what the other party desires.

A

Double coincidence of wants

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Systems that buyers and sellers to exchange goods and services

A

Markets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Purposeful evaluation of the available opportunities to make the best decision possible

A

Economic thinking

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

The limited nature of society’s resources, given societies unlimited wants and needs.

A

Scarcity

17
Q

Economists believe that individuals compare the benefits and costs of various options when making a decision and in so doing act ________.

A

Rationally

18
Q

In economics, choices are necessary because of the presence of:

A

Scarcity