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ECON 2105 > Chapter 1 > Flashcards

Chapter 1 Flashcards

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1
Q

our inability to satisfy all our wants

A

scarcity

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2
Q

a reward that encourages an action, or a penalty that discourages one

A

incentive

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3
Q

the social science that studies the choices that individuals, businesses, government, and entire societies make as they cope with scarcity and that influence and reconcile those choices

A

economics

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4
Q

the study of the choices that individuals and business make, the way these choices interact in the markets and the influence of governments

A

microeconomics

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5
Q

the study of the performance of the national economy and the global economy

A

macroeconomics

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6
Q

the objects that people value and produce to satisfy human wants

A

goods and services

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7
Q

physical things that people value and are probably willing to pay money for…though they may not have to pay

A

goods

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8
Q

tasks that accomplish something for people, and which people are willing to pay money for…though they may not have to pay

A

services

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9
Q

knowledge and skills that increases the productivity of labor is

A

human capital

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10
Q

considering all the available options and making the best decision for you, based on your own feelings and preferences

A

self-interested

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11
Q

the best imaginable outcome would be everyone to have infinity of all goods and services

A

social interest

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12
Q

work time and work effort that people devote to producing goods

A

labor

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13
Q

the tools, equipment, buildings, and other constructions that businesses use to produce goods and services

A

capital

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14
Q

the human resource that organizes the other three factors of production: labor, land, and capital

A

entrepreneurship

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15
Q

the income that land earns

A

rent

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16
Q

the income that capital earns

A

interest

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17
Q

the income earned by entrepreneurship

A

profit

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18
Q

resource us is this if it is not possible to make someone better off without making someone else worse off

A

efficient

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19
Q

expansion of international trade, borrowing, lending, and investment

A

globilization

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20
Q

an economic system in which individuals own land and capital and are free to sell land, capital, and goods and services in markets

A

market capitalism

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21
Q

an economic system in which the government dominates

A

centrally planned socialism

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22
Q

market capitalism with government regulation

A

mixed economy

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23
Q

a constraint that involves giving up one thing to get something else

A

tradeoff

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24
Q

a choice that compares costs and benefits and achieves the greatest benefit over cost for the person making the choice

A

rational choice

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25
the benefit of something is the gain or pleasure that it brings and is determined by preferences
benefit
26
a description of a person's likes and dislikes and the intensity of those feelings
preferences
27
the highest-valued alternative that we must give up to get something
opportunity cost
28
when a choice is made by comparing a little more of something with its cost
margin
29
the benefit that a person receives from consuming one more unit of a good or service; it is measured as the maximum amount that a person is willing to pay for one more unit of the good or service
marginal benefit
30
the opportunity cost of producing one more unit of a good or service
marginal cost
31
marginal cost equation
the increase in total cost divided by the increase in output
32
a description of some aspect of the economic world that includes only those features of the world that are needed for the purpose at hand
economic model
33
a graph that plots the value of one variable against the value of another variable for a number of different outcomes
scatter diagram
34
a relationship between two variables that move in the same direction
positive relationship/direct relationship
35
a relationship shown by a straight line
linear relationship
36
variables that move in opposite directions
negative/inverse relationship
37
behavior/social sciences examples
Psychology: 300 BC Sociology: 1300s-1700s Anthropology: 1700s Economics: 1776 Adam Smith's The Wealth of Nations
38
What makes economics different from other social and behavioral sciences
economics is particularly concerned with the choices people make, response to scarcity, and the incentives people face
39
examples of the choices that people make
what they buy, how much education they get, whether they smoke cigarettes
40
examples of scarcity
food people eat and available dorm rooms
41
examples of incentives people face
high gas prices, this might make me sick, my mom will be furious
42
two different types of economics
microeconomics: individual people, businesses, or industries and the influence of government on people and businesses (whether a high school senior skips class, prices and quantities of minivans sold in 2018, how a tax on cigarettes will affect teen smoking rates) macroeconomics: national economics or the global economy (unemployment rates in China vs the US, the value of everything produced in Canada in 2018, how much stuff can you buy with $1 today versus in the 1950s)
43
Two Big Economic Questions
1. What, how, and for whom | 2. Do choices made in the pursuit of self-interest also promote the social interest?
44
Is it possible to do something that increases how productive one hour of your labor can be?
Yes
45
How do we produce those goods and services?
1. Land: natural resources, anything provided by nature (field, oil, water, and air) 2. Labor: Physical and mental effort of humans 3. Capital: non-human tools, buildings, machines, etc. that are used to produce goods and services 4. Entrepreneurship: the development of new ideas about how to organize land, labor, and capital to create things of value
46
Once those goods and services are produced, who gets to have them?
- land earns rent - labor earns wages - capital earns interest - entrepreneurship earns profit All of these make up someone's income, which they can use to buy the goods and service they want. Earning more income equates to being able to buy more stuff, and more expensive stuff
47
What question
what we produce varies across countries and changes over time
48
how question
how we produce is described by the technologies and resources we use
49
for whom question
who consumes the goals and services that are produced depends on the income that people earn
50
Who earns the most income
labor
51
Is social interest possible?
No, because we live in a world of scarcity
52
Two key concepts help us think about what is actually in the social interest
efficiency and faireness
53
Examples of issues that promote self-interest over social interest
- globalization - information-age monopolies - climate change - COVID pandemic
54
Economic way of thinking
- a choice is a tradeoff - people make rational choices by comparing benefits and costs - benefit is what you gain from something - cost is what you must give up to get something - most choices are "how much" choices made at the margin - choices respond to incentives
55
Central idea of economics
we can predict the self-interested choices that people make by looking at the incentives they face
56
might be right or wrong, but we can test it by checking facts
positive statement: must test positive statements
57
what ought to be, depends on values and cannot be tested
normative statement (we ought to cut our use of coal by 50%)
58
Jobs for economists
market research analyst: 57% financial analyst: 37% budget analysis: 4% economist: 2%
59
market research analyst
works with data on buying patterns and tries to forecast the likely success of a product and the price that buyers are willing to pay for it
60
financial analyst
studies trends, fluctuations in interest rates, stocks, and bond price, tries to predict the cost of borrowing, and returns on investements
61
if all other relevant things remain the same
ceteris paribus
62
Skills for economic jobs
``` critical thinking skills analytic skills math skills writing skills oral communication skills ```
63
Patterns to look for in graphs
variables move in the same direction variables move in opposite directions variables have a maximum or a minimum variables are unrelated
64
vertical line
x constant
65
horizontal line
y constant

ECON 2105 (1 decks)

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