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ECON 101 > ECON 101 - chp. 1 > Flashcards

ECON 101 - chp. 1 Flashcards

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1
Q

Define economics

A

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

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2
Q

define scarcity

A

Our inability to get eveyrthing we want

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3
Q

why and how do we make choices?

A

we make choices due to scarcity.

the choices we make depend on the incentives we face

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4
Q

Define incentive

A

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

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5
Q

provide a positive incentive

A

scholarship for getting high grades

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6
Q

provide a negative incentive

A

parking ticket

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7
Q

define microeconomics

A

study of choices that individuals and businesses make, the way those choices interact in markets, and the influence of governments.

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8
Q

define macroeconomics

A

study of the performance of the national and global economics

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9
Q

what are the 2 questions that summarize the scope of economics

A
  1. how do choices end up determining what, how, and for whom goods + services get produced?
  2. do choices made in the pursuit of self-interest also promote social interest?
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10
Q

define goods + services

A

objects that people value and produce to satisfy human wants

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11
Q

define factors of production

A

resources we use to produce goods + services

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12
Q

describe what we produce

A

what we produce varies across countries and changes over time

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13
Q

describe how we produce

A

how we produce is based on the technologies and resources we use

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14
Q

what are the factors of production

A
  1. land
  2. labour
  3. capital
  4. entrepreneurship
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15
Q

what does the quality of labour depend on?

A

human capital (knowledge + skills)

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16
Q

define land

A

the “gifts of nature” that we use to produce goods + services

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17
Q

how to obtain human capital

A

education, work experience, on-the-job training

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18
Q

define capital

A

tools, instruments, machines, building and other constructions that businesses use to produce goods + services

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19
Q

Define entrepreneurship

A

the human resources that organizes land, labour, and capital

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20
Q

for whom does the goods and services get produced for?

A

dependent on the incomes that people aern

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21
Q

what are the revenue for each factor of production

A
  1. land = rent
  2. labour = wages
  3. capital = interest
  4. entrepreneurship = profit
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22
Q

which factor of production revenue earns the most? what percentage?

A

wages from labour earns the most. about 70%

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23
Q

define self-interest

A

choice that you think are best for you

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24
Q

define social interest

A

choices that are best for society as a whole

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25
what are the 6 key ideas that define the economic way of thinking
1. a choice is a tradeoff 2. people make rational choices by comparing benefits + costs 3. benefit is what you gain from something 4. cost is what you must give up to get something 5. most choices are "how-much" choices made at the margin 6. choices respond to incentives
26
define a rational chocie
a chocie that compares the costs and benefits and achieves the greatest benefit over cost for the person making the choice
27
how do you determine the rationality of a choice?
on the wants of the person making the choice
28
define benefit in the econ context
the gain/pleasure that it brings and is determined by preferences
29
define preferences
what a perons likes and dislikes and the intensity of those feelings
30
define opportunity cost of something
is the highest-valued alternative that must be given up to get it.
31
what are the 2 components of opportunity cost
1. time 2. purchasing power (money)
32
define marginal benefit
benefit from pursuing an incremental increase in an actiivty
33
define marginal cost
oppourtunity cost of pursuing an incremental increase in an activity
34
What happens when there's a change in marginal benefit/cost
there's a change in the incentives we face and leads us to change our choice
35
what happens when marginal benefit is greater than marginal cost for an activity
our rational choice is to do more on the activity
36
define positive statements
it's about "what is" it must be right or wrong can be tested by checking it against facts
36
define normative statements
is about :what ought to be" it expresses an opinion and cannot be tested
37
define an economic model
a description of some aspect of the economic world that includes only those features that are needed for the purpose at hand
38
define ceteris paribus
all other things being equal
39
what types of experiments do economists use to test economic models?
1. natural experiments 2. statistical investigations 3. economic experiments
40
define natural experiements
situations in the ordinary course of economic life in which the one factor of interest is different and other things are ceteris paribus. - takes too long
41
define statistical investigations
to find correlations -
42
define economic experiments
putting people in decision-making situations and varying the influence of 1 factor at a time to discover how they respond - costly
43
define a scatter diagram
plots the values of 1 variable against the value of another variable for a number of different values of each variable
44
what's the importance of a scatter diagram
reveals whether a relationship exists between 2 variable
45
what are the 4 cases to look in for graphs
1. variables moving in the same direction 2. variable move in opposite directions 3. variables have a maximum or minimum 4. variables are unrelated
46
define a direct relationship in regards to 2 variables
2 variables that move in the same direction
47
define a linear relationship
a relationship shown by a straight line for variables that move in the same direction
48
define a positive relationship
a line that slopes upward - variables that move in the same direction
49
define an inverse relationship in the context of variables
a relationship between 2 variables that move in opposite directions.
50
define negative relationship
a line that slopes downwards
51
how to show graphs of variables that are unrelated
a y constant or an x constant
52
define slope of a relationship
the change in the value of the variable measured on the y-axis divided by the change in value of the variable measured on the x-axis
53
how to calculate the slope of a straight line
rise over run
54
how to calculate the slope of a curve line on a point
slope is equal to the slope of a straight line that is the tangest to that point
55
how to calculate the slope across an arc
the average slope of a curved lined across an arc is equal to the slops of a straight line that joins the endpoints of the arc.
56
How to graph a relationship among more than 2 varibales
we can plot the relationship between 2 variables by holding other variables constant (ceteris paribus)
57
How is what society can get limited?
limited by the productive resources available
58
define goods
physical/tangible objects
59
define services
tasks performed for people - intangible objects
60
define labour
the work time and work effort hat people devote to producing good + services - includes physical + mental efforts of all the people
61
define financial capital
money stocks, bonds
62
importance of financial capital
enabling businesses to borrow funds that they use to buy physicals capital
63
can self-interest promote social interest
yes, it depends on the context and what your self-interest is
64
define efficient in the context of economics
to describe a situation that can't be improved upon
65
define globalization in economics
expansion of international trade, borrowing and lending, and investment
66
define market capitalism
economic system in which individuals own land + capital and are free to buy and sell land, capita, and goods and services in markets. market for goods and services which determine what, how, and for whom goods and services are produced. there's no supreme planner guiding the use of scare resources and the outcome is unintended and unforeseeable.
67
define a centrally planned socialism
economic system where the government owns all the land, capital, directs works to jobs and decides what, how and for whom to produce.
68
define a mixed economy
market capitalism with government regulation
69
define a tradeoff in the context of economics
an exchange - giving up 1 thing to get something else
70
how do economists measure benefit?
the most that a person is willing to give up to get something
71
what do economists see incentives the key to?
key to reconciling self-interest and social interest
72
define an economic model
a description of some aspect of the economic world that includes only those features that are needed for the purpose at hand
73
when are most choices made
at the margin by comparing marginal benefit and marginal cost
74
how can economics be use as a toolkit
used to provide advice on government, business and personal economic decisions.

ECON 101 (14 decks)

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