Econ vocab 1

Question 1

Microeconomics

Answer 1

focuses on individual decision-making units and how they interact

Question 2

Macroeconomics

Answer 2

explores the economy as a whole

Question 3

Scarcity

Answer 3

the fixed amount of goods or services available

Question 4

Traditional economy

Answer 4

an economic system in which traditions, customs, and beliefs help shape the goods and services the economy produces, as well as the rule and manner of their distribution also referred to as a subsistence economy, a traditional economy is defined by bartering and trading

Question 5

Command economy

Answer 5

an economic system in which the means of production are publicly owned and economic activity is directed by a central government or portion of the government

Question 6

Market economy

Answer 6

an economic system in which the forces of supply and demand determine what goods and services are produced

Question 7

Mixed economy

Answer 7

an economy that practiced characteristics of both command and market economies; supply and demand largely influence the economy, but there is government intervention to meet certain economic goals

Question 8

Opportunity cost-

Answer 8

the cost of choosing; what you give up by choosing one option

Question 9

Goods

Answer 9

objects that can fulfill human wants/needs, provide utility

Question 10

Services

Answer 10

economic activity that is intangible; provides utility, but cannot be stored

Question 11

Endowment

Answer 11

natural and human resources from which all goods and services must be produced
-finite, but not fixed (scarcity)

Question 12

Utility

Answer 12

satisfaction; economists assume maximizing this drives individual choice; measured in utils

Question 13

Profit motive

Answer 13

the tendency of people to engage in activities that will lead to monetary gain

Question 14

Consumer sovereignty-

Answer 14

the economic power of the individual in a free market

Question 15

Government regulation

Answer 15

requirements the government places on private firms and individuals to achieve the government’s goals

Question 16

Marginal utility

Answer 16

additional increment of utility associated with consuming one more unit of a good or service

Question 17

Margin

Answer 17

in a succession of units, the specific unit you are focusing on

Question 18

Total Utility

Answer 18

the total satisfaction derived from consuming a specific quantity of a good or service; the total of marginal utilities for all individual units consumed

Question 19

Satiate

Answer 19

satisfy

Question 20

Initial decision

Answer 20

over-simplified decision-making process based on utility (consume until marginal utility =0)
Bliss point-maximization of utility

Question 21

Bliss point

Answer 21

-maximization of utility

Question 22

Marginal analysis

Answer 22

evaluating the impact of one additional unit

Question 23

Util

Answer 23

a measure of utility (this is an abstract concept)

Question 24

Diminishing marginal productivity

Answer 24

initially, one input increases the initial successive units of input toward the output, but eventually, this will add to less output

Question 25

Balancing at the margin

Answer 25

maximizing utility in light of the scarcity

Question 26

Discounting the future

Answer 26

utility diminishes the further in the future that utility is realized