Chapter 1 Flashcards
Key Terms + Concepts
What is scarcity?
The problem that comes up from a limited amount of money, time, and energy
What is economics?
How people, businesses and governments make the best choice for themselves for them to get what they want and how those decisions interact in markets
What is opportunity cost?
The true cost of any choice is what you must give up to get it
What is incentive?
Rewards and penalties for choices
What is production possibilities frontier (PPF)?
Max combo of products or services that can be produced with existing input
What is absolute advantage?
The ability to produce a product or service at a lower absolute cost than another producer
What is a model?
Simplified representation of the real world
What is input?
The productive resources (labor, natural resources etc.) used to produce products and services.
What are positive statements?
Statements that are. They are either true or false and can be checked
What are normative statements?
Statements that are cannot be factually checked such as judgement or opinions.
What is microeconomics?
An analysis of choices that individuals make (be it of households, businesses or government) and how those choices interact in markets
What is macroeconomics?
An analysis of the whole Canadian and global economy, a combination of everyone’s microeconomic choices
What are marginal benefits?
Additional benefits from the next choice
What are marginal opportunity benefits?
Additional opportunity costs from the next choice
What are implicit costs?
Opportunity costs of investing your own money or time
