Chapter 1 Flashcards
(24 cards)
Economics
social science of scarcity
economic perspective
way economist see the world
oppurtunity cost
what is given up when a choice is made to but a product
Purposeful Behavior
people work to increase utility (happiness or satisfaction)
Marginal Analysis
comparison between marginal benefit and marginal cost
Marginal Analysis
comparison between marginal benefit and marginal cost
No free lunch
there will always be a cost to produce good even if the cost doesn’t effect the individual
Economic Principle
generalization, other things equal assumption, graphical expressions
Other things equal assumption
“ceteris paribus” to look at other variables, some variables are kept the constant
Aggregate
total
Positive Economics
factual
Normative economics
judgment/opinion
Economizing problem
limited income with unlimited wants
Budget Line
choice between goods and limited income.
4 economic resources
Land, labor, capital, entrepreneurial ability
Land
natural resources
Labor
physical and mental ability
Capital
investment, something produced but not used to produce something else
Entrepreneurial ability
the combining of resources or good in ways most people wouldn’t, thinking out of the box
Entrepreneurs
takes initiative, makes strategic decisions, thinks out of the box
Production possibility model
curved. economic mode that shows different combination of 2 goods that the economy could produce. fixed resources and technology
Law of increasing oppurtunity cost
as more a good us produced, its marginal oppurtunity cost increases
international trade
specialization, increased production possibilities
Pitfalls
biases, loaded terminology, correlation not causation, fallacy of composition
