Chapter 1 Flashcards
(24 cards)
OPPORTUNITY COST
the amount of other products that must be forgone or sacrificed to produce a unit of a product
ECONOMICS
the branch of knowledge concerned with the production, consumption, and transfer of wealth.
Marginal Analysis
comparison of marginal benefits and marginal costs, decision making
OTHER-THINGS-EQUAL-ASSUMPTION
assumption that factors other than those being considered are held constant; ceteris paribus assumption
MICROECONOMICS
part of economics concerned with decision making by individual units such as a household, a firm, or an industry and with individual markets, specific goods and services, and product and resource prices
MACROECONOMICS
part of economics concerned with the economy as a whole; with such major aggregates as the household, business, and government sectors; and with measures of the total economy
POSITIVE ECONOMICS
analysis of facts or data to establish scientific generalizations about economic behavior
Positive Statements
concerns what “is”, “was”, or “will be”, and contains no indication of approval or disapproval (what should be)
NORMATIVE ECONOMICS
part of economics involving value judgments about what the economy should be like; focused on which economic goals and policies should be implemented; policy economics
Normative Statements
expresses a value judgement about whether a situation is subjectively desirable or undesirable
Individual Choice
decisions by an individual about what to do and what not to do. In fact, you might say that it
isn’t economics if it isn’t about choice.
Limited Income
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BUDGET LINE
a line that shows the different combinations of two products a consumer can purchase with a specific money income, given the products prices
Society’s Economizing Choices
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Scarce Resources
LAND
LABOR
CAPITAL
ENTREPRENEURIAL ABILITY
Production Possibilities Model
https://www.google.com/search?q=production+possibilities+model&tbm=isch&imgil=PFhb5hpgHn9ioM%253A%253Bhttps%253A%252F%252Fencrypted-tbn3.gstatic.com%252Fimages%253Fq%253Dtbn%253AANd9GcSJ_vvlPrgVonYYBaEYVrN7wi10vl5fuMJHL6wPUIgHGlPsyIMy7A%253B640%253B480%253BLzTqyVX6pGM1ZM%253Bhttp%25253A%25252F%25252Fwww.harpercollege.edu%25252Fmhealy%25252Feco212i%25252Flectures%25252Fppc%25252Fppc.htm&source=iu&usg=__5O3bZwCSsz7RVEEthZgQoX4d92M%3D&sa=X&ei=u6XxUpbvDOaS2QWo6oCgAg&sqi=2&ved=0CCgQ9QEwAA&biw=1366&bih=638#facrc=&imgdii=&imgrc=PFhb5hpgHn9ioM%253A%3BLzTqyVX6pGM1ZM%3Bhttp%253A%252F%252Fwww.harpercollege.edu%252Fmhealy%252Fecogif%252Fppc%252Fppcppc.gif%3Bhttp%253A%252F%252Fwww.harpercollege.edu%252Fmhealy%252Feco212i%252Flectures%252Fppc%252Fppc.htm%3B640%3B480
Table and Opportunity Cost Calculation
http://www.youtube.com/watch?v=VZrNbHCkv6A
LAW OF INCREASING OPPORTUNITY COST
principle that as the production of good increases, the opportunity cost of producing an additional unit rises
Production Possibilities Curve
curve showing the different combinations of two goods or services that can be produced in a full-employment, full-production economy where the available supplies of resources and technology are fixed
Points on, inside and outside the Production Possibilities Curve
A point outside a PPC shows the problem of scarcity. A point outside the Production Possibility Curve shows a combination that cannot be attained because sufficient quantity of resources are not available to produce them.
Optimal Allocation of Resources Diagram (MB=MC)
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ECONOMIC GROWTH
- outward shift on the production possibilities curve that results from an increase in resource supplies or quality or an improvement in technology
- an increase of real output (gdp) or real output per capita
Shifts of production possibilities curve
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Sources of Economic Growth
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