INTRO TO ECONOMICS Flashcards
(121 cards)
1
Q
It is the study of the proper allocation and efficient use of scarce resources to produce commodities for the satisfaction of unlimited needs and wants of man.
A
Economics
2
Q
It is also defined as the study of how societies use scarce resources to produce valuable commodities and distribute them among different people.
A
Economics
3
Q
The word ‘economics” comes from the Greek work _____
A
Oikonomia
4
Q
It literally translates to household management.
A
Oikonomia
5
Q
It is anything which yields satisfaction to someone.
A
Goods
6
Q
It is anything used to satisfy a person’s wants and desires.
A
Goods
7
Q
Classification of Goods
A
- Tangible goods
- Intangible goods
- Consumer goods
- Capital goods
- Essentials
- Luxury goods
- Economic good
- Free
8
Q
It is in the form of material goods or commodities.
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Tangible goods
9
Q
If the goods are in the form of services.
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Intangible goods
10
Q
Goods which yield satisfaction directly. (food and soft drinks)
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Consumer goods
11
Q
Goods used in the production of other goods and services.
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Capital goods
12
Q
If they are used to satisfy the basic needs of man such as food, shelter, and medicine.
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Essentials
13
Q
They are those goods man may do without, but are used to contribute to his comfort and well being.
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Luxury goods
14
Q
It is a good which is both useful and scarce. It has a value attached to it and a price has to be paid for its use.
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Economic good
15
Q
If a good is so abundant that there is enough of it to satisfy everyone’s need without anybody paying for it.
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Free
16
Q
Goods are created by means of _______
A
Production
17
Q
Production may involve the physical transformation of a commodity
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Manufacturing or industry
18
Q
Production may also take place in the farm.
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Agriculture production.
19
Q
Exploration for oil, mineral, and precious metals
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Production
20
Q
The things which are needed to carry on the production of goods and services.
A
Economic Resources / Factors of Production
21
Q
Three factors of production
A
Land
Labor
Capital
22
Q
This refers to all natural resources which are given by and found in nature, and are therefore, not man-made. This term includes the soil, river, forest, and mineral deposits.
A
Land
23
Q
The people, who own land and offer it to others for their use, earn an income called ________
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Rent
24
Q
It is any form of human effort exerted in the production of goods and services.
A
Labor
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The payment for labor
Wage
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**Materials used in the production of goods** and services including money.
Capital
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It refers to **man-made goods used in the production** of goods and services; it also includes buildings, machinery, raw materials, and other physical necessities for use in production.
Capital
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The payment of capital
Interest
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This refers to people that are combining the other three factors of production to create some products or services to sell.
Entrepreneur
30
The economist regard entrepreneurs as a ______
Specialist form of labor input.
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The payment for entrepreneurs
Profit
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It is the **amount that left behind after all allocations** to the other economic resources have been made.
Profit
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He organizes production by combining land, labor, and capital to make goods and services
Entrepreneur
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He makes business decisions by determining what goods or services to produce and how to produce them
Entrepreneur
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He bears the risk of his business decisions. He must suffer the consequence of losses if he fails, but in the same light, he must reap the profits as a reward if he succeeds.
Entrepreneur
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He innovates by introducing new products, new technology, and new ways of organizing business.
Entrepreneur
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It is the reason why people economize
Scarcity
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Refers to the condition in which resources are available only in a **limited supply.**
Scarcity
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It refers to the **limitations** that exist in obtaining all the goods and services that people want.
Scarcity
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It gives **rise to economic problems** and it is the reason why man has to make a choice.
Scarcity
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The **imbalance between our desires** and the means of satisfying those desires.
Scarcity
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________ must make individual choices about **what goods to produce** given limited raw materials.
Producers
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_______ have to **decide on whether to buy**
Consumers
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Two Sides of Scarcity
- The infinite nature of human needs and wants.
- The limited nature of available resources.
45
_______ are **limited** while human **wants** have no boundaries.
Resources
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The author of The Human Side of Enterprise says that “Man is a wanting animal"
Professor Douglas McGregor
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It can be described as the **desire for goods** and services
Wants
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In every society there is a need to devise a method for determining which **alternative uses the scarce resources should be put into**. This is the process of _______
Allocation
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Society must be able to create a system of ______ that will be able to answer or solve the four basic economic question
Allocating resources
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The four basic economic questions
- What to produce;
- How much to produce;
- How to produce; and
- For whom to produce.
51
We prioritize those goods which we deem to be the most important. This would depend on what is needed, what is wanted, and **what has to be produced.**
What to produce
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It refers to the **value of what is given up** by not pursuing the next best alternative.
Opportunity cost
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It is not monetary but can be applied when money is involved.
Opportunity cost
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It is one of the factors that we need to take into consideration in producing another product.
Opportunity cost
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It is defined as the benefits that must be foregone by not allocating the resources to the next best activity.
Opportunity cost
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This question tackles the **method of producing** the goods and services
How to produce
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As a rule of thumb, goods and services must be developed or produced at its ______
Optimum level
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It is a **maximum output with a minimum input** without sacrificing the quality.
Optimum level
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This question is now on the **problem of distribution**
For whom to produce
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It refers to a **set of economic institution** that dominates a given economy with the main objective of solving the basic economic problems and proper allocation of resources.
Economic system
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Nations use _________ to determine how to use their limited resources effectively
Economic systems
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Primary goal of an economic system is to provide people with a **minimum standard of living**, or _______
Quality of life
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Different types of Economic Systems
Traditional Economy
Market Economy (free enterprise)
Command Economy
Mixed Economy
64
Decisions on what, how and for whom to produce are made by referring to the **traditional manner** of doing things
Traditional economy
65
Patterns of consumption are often dictated by _________
Customs and tradition.
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_________ are made with great influence from the past. It **finds answers to the economic problems** by duplicating the decisions made by previous generations.
Economic decisions
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This system is generally **based on the idea that the government** could be relied upon to make decisions on the distribution of resources that is most desirable for society.
Command Economy/ Centrally Planned Economy
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The identification of what goods to produce, the determination of production quotas that have to be met, the resources that have to be employed, etc., are all done by the _________
Government
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The **second solution to the economic problem** is the allocation of scarce resources by government, or an agency appointed by the government.
Central planning
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Economies that **exclusively use central planning** are called
Command economies
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They **direct or command resources** to be used in particular ways.
Government
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Command economies have certain advantages over ______
Free market economies
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They also **fail at times to allocate resources efficiently**, so remedies often involve the allocation of resources by government to compensate for these failures.
Free markets
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It is **centralized in the hands of the government.**
Decision making
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It is the _______ that decides which goods and services to be produced in accordance with its centralized National Plan.
Government
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In this type of economy, the means of production is owned by the government.
The Command Economy / Centrally Planned Economy
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Two types of command economy
Strong Command
Moderate Command
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It is where **government makes all decisions** (communism- China, Cuba)
Strong command
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It is where some form of **private enterprise exists but the state owns major resources** (socialism – France and Sweden)
Moderate command
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Command economy is also know as ____________
Planned or Managed Economy
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**Businesses and consumers decide what they will produce** and purchase and in what quantities
Market Economy (Free Enterprise)
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Market Economy is also called _________
Free Market Economy or Free Enterprise Economy
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Market economy decisions are made according to ________
Law of supply & demand
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_________ and ________ of goods and services determine what is produced and the price that will be charged.
Supply and demand
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The basic characteristic of this economy is that **resources are privately owned and decisions are made by the people** themselves.
The Market Economy
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**Markets enable mutually beneficial exchange between producers and consumers**, and systems that rely on markets to solve the economic problem
Market Economy
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In a _______, resources are allocated through the interaction of free and **self-directed market forces.**
Free market economy
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The system **depends on prices set by the conditions of demand and supply.**
Market Economy
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In this system, the main institution within which all **economic activities are situated in the market.**
Market Economy
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It is simply where **buyers and sellers meet**
Market
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The **market system cannot always regulate itself** and thus is not able to arrive at the desirable allocation of resources.
Market failures or market imperfections
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**Only one seller exists** in the locality
monopoly
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Means of production and distribution are privately owned.
Market Economic Systems
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There are no longer pure command systems or pure market systems and while there may still be pure traditional systems they are confined only to small communities.
Mixed Economy
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Mixed economies may have a distinct _______, where resources are allocated **primarily by market forces, such as the grocery sector of the UK economy.**
Private sector
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Mixed economies may have a distinct ______, where resources are allocated **mainly by government**, such as defence, police, and fire services.
Public sector
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Economic systems can be evaluated in terms of how _____ they are in achieving economic objectives.
Efficient
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- **Combination of a market and a command economy**
- Government takes of people’s needs
- Marketplace takes care of people’s wants.
Mixed economy
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Methodologies of Economics
Positive Economics
Normative Economics
100
It is an **analysis of economic behavior** that uses **economic theory and empirical analysis** to explain what is or what happened.
Positive Economics
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It seeks to predict and explain economic phenomena and describes **facts and data in the economy**. It does not value economic judgment.
Positive Economics
102
It incorporates ethics and **value judgments about what the economy** should be like or what particular policy actions should be recommended to achieve a goal.
Normative Economics
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It is **concerned with what one believes ought to be.** Hence, it deals with the appropriateness of an economic outcome or policy.
Normative economics
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Stages of Scientific Approaches to Economics
Observation
Definitions and Assumptions
Deductions
Empirical Testing
105
An analyst should be **able to recognize conditions, behaviors, and events in the environment**. By simply looking around, he shall be able to obtain information necessary to analyze an economic principle.
Observation
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The analyst should **describe the specific uses of the study and the peripheral conditions** which affect the economic behaviors which are being studied.
Definitions and Assumptions
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These **are hypotheses or theories presented for empirical validation**. They are temporary conclusions made, based on one’s observations and are still subject to the presentation of evidence.
Deductions
108
It **starts with a set of axioms about economies and how they work**, and relies on these principles to explain individual cases or events.
Deductive Economics
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It is a staple in any introductory economics course, is an **example of deductive reasoning** because it involves a set of generally accepted **principles about demand and supply.**
Supply and demand analysis
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______ in economics **starts with a generally accepted principle** and proceeds to the specific.
Deduction
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**Deductions have to be tested** as to their validity and correctness.
Empirical Testing
112
The presentation of ______ will be the **basis of rejecting or accepting a hypothesis**.
Empirical evidence
113
The evidence gathered consists of _____ which is used to verify one’s guesses.
Statistics
114
In the Philippines, the ______, ________, ______, and even the municipal and city halls are the government agencies which serve as major sources of statistics.
- National Census and Statistics Office
- NEDA
- Central Bank
115
Branches of Economics
- Macroeconomics
- Microeconomics
116
It **deals with the economy as a whole**, or with the basic subdivisions or **aggregates** that make up the economy
Macroeconomics
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It is a **collection of specific economic units** that are treated as if they were **one unit**
Aggregate
118
It **includes measures of total output*(, total employment, total income, **aggregate expenditures**, and the general price level.
Macroeconomics
119
It is **concerned with specific economic units** and a detailed consideration of the behavior of these **individuals units**
Microeconomics
120
It looks at specific economic units. **It is concerned with the individual industry**, firm or household and the price of specific products and resources.
Microeconomics
121
**It is a study of price system**, the individual consumer, the individual firm. It is the division of Economics that studies the economy in parts
Microeconomics
