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Micro Econ > Mid Term 1(Chapter 1-4) > Flashcards

Mid Term 1(Chapter 1-4) Flashcards

(55 cards)

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1
Q

What is economics

A

Economics is the social science that studies the choices individuals, firms, and governments make when coping with scarcity and the incentives that influence and reconcile those choices

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2
Q

what is micro economics

A

Micro economics studies the choices made by individuals and firms and how those choices interact with markets and influence governments

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3
Q

what is macro economics

A

macro economics studies the performance of the national and global economies including trade, or monetary/fiscal policy

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4
Q

what are incentives and costs

A

incentives are the rewards we get from choices we make and costs are are what we lose from the choices we make

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5
Q

what are the two big economic questions

A

How do choices end up determining what we produce, how we produce, and who we produce it for
When do choices made in pursuit of self interest also promote social interest

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6
Q

what is self interest

A

making choices that are best for you

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7
Q

what is social interest

A

making choices that are best for society
Has two dimensions: efficiency and equity

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8
Q

what are the four factors of production

A

Land, Labour, Capital, Entrepreneurship

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9
Q

what does each factor provide

A

land gets rent, labour gets wages, capital gets interest, entrepreneurship gets profit

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10
Q

What are the six key ideas that define the economic way of thinking

A

a choice is a tradeoff, people make rational choices by comparing costs and benefits, benefit is what you gain from something, cost is what you must give up to get something, most choices are “how much” choices made at the margin, choices respond to incentives

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11
Q

what is opportunity cost

A

the highest valued alternative you give up when choosing another option

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12
Q

What are the two types of economic statements

A

positive, normative

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13
Q

what are positive statements

A

statements that can be tested against facts

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14
Q

what are normative statements

A

statements that are opinion based and can not be tested

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15
Q

what are economic models

A

they make predictions then are tested by comparing it with facts

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16
Q

what are alternatives to economic models

A

statistical investigations, natural experiments, economic experiments

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17
Q

what are the skills needed for economics jobs

A

critical thinking, analytical skills, math skills, writing skills, oral communication skills

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18
Q

what are some current issues regarding self and social interest

A

globalization, information aged monopolies, climate change, covid 19 pandemic

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19
Q

what is market capitalism

A

an economic system wehre individuals own land and capital which can be bought and sold in markets. these markets along with supply and demand determine what is made, how its made, and who its made for

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20
Q

what is centrally planned socialism

A

an economic system where the government owns the land and capital and decides what is produced, how its produced, and for who. the only country still usign 5this today is cuba and north korea

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21
Q

what is a mixed economy

A

a market economy with government regulation for certain things

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22
Q

what are modern protesters arguments against market economies

A

large corporations ahve too much control, governemnts can allocate resources better, more regulation in social interest is needed, every winner in a market creates a loser,

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23
Q

what is the production possibilities frontier

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A

PPF shows the opportunity cost between two production possibilities. outside the curve is impossible, inside the curve is inefficient

24
Q

what is production efficiency

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A

achieved when you can not produce one more unit of a good without producing less of another good

25
what is marginal benefit
the benefit you get from one additional unit of a good. decreases due to principle of decreasing marginal benefit
26
what is marginal cost
the opportunity cost of producing one additional unit of a good
27
what is allocative efficiency
the intersection between the marginal benefit and marginal cost curves
28
what do each of the marginal curves mimic
marginal benefit mimics demand, marginal cost mimics supply
29
What is gain on trade
when two people who each have a comparative advantage in a product specialize and make a trade between each opportunity cost they both increase total production without increasing opportunity cost
30
what is the real circular flow in economic coordination
households provide factors of production to firms, firms provide goods and services to households
31
what is the money circular flow in economic coordination
households provide expenditures to firms, firms provide rent, wages, interest, and profits to households
32
why is the PPF bowed outwards
because the more you make of each good the higher the opportunity cost of the other. this is due to resources being more efficient at producing certain products
33
how is marginal cost represented by the PPF
the marginal cost at any point on the PPF is the slope at that point
34
what is economic growth
the expansion of the PPF outwards
35
how does economic growth take place
either technological change or capital accumulation. the resources used to power economic growth can not be used to create consumer goods and services so economic growth has an opportunity cost
36
what do decentralized economies need
firms, markets, property rights, money
37
what is a firm
an economic unit that hires factors of production and organizes them
38
what is a market
an arrangement that allows buyers and sellers to get information and do business with eachother
39
what are property rights
social arrangement that govern the ownership, use, and disposal of anything valuable
40
what is money
any commodity or token that is generally accepted as payment
41
what is a competitive market
many buyers and sellers but no one buyer or seller has control over the market
42
what is the money price
the number of dollars that must be given in exchange of a good or service
43
what is the relative price
ratio of money price of one good to anohter. is na opportunity cost
44
what is demand
demand means someone wants something, can afford it, and plans to buy it
45
what is quantity demanded
the amount of a good consumers plan to buy at a given price over a certain period of time
46
what is the law of demand
other things equal, as price increases quantity demanded decreases and vice versa
47
what is the substitution and income effect
substitution effect means as the price of a good rises consumers will look to substitutes to replace that good income effect means as the price of a good rises it takes up a larger amount of consumers incomes and they will either buy less or stop buying the good
48
what factors lead to a change in demand
the prices of related goods, expected future prices, income, expected future income and credit, population, preferences
49
What is supply
supply is when a firm has the resources to produce a good, can profit from producing it, and plans to produce it
50
what is quantity supplied
the amount of a good producers plan to produce in a certain amount of time
50
what is the law of supply
other things equal, as price increases quantity supplied increases and vice versa
51
what factors cause a change in supply
the prices of factors of production, the prices of related goods produced, expected future prices, the numebr of suppliers, technology, the state of nature
52
what is market equilibrium
the point where quantity demanded is equal to quantity supplied
53
how does price adjust markets
in a shortage price increases to decrease demand and increase supply until equilibrium is reached in a surplus price decreases to decrease supply and increase demand until equilibrium is reached
54

Micro Econ (3 decks)

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