Principles of Econ Exam 1 Flashcards
(75 cards)
What is the definition of circular flow diagram?
a diagram that views the economy as consisting of households and firms interacting in a goods and services market and a labor market
What is the definition of command economy?
an economy where economic decisions are passed down from government authority and where the government owns the resources
What is the definition of division of labor?
the way in which different workers divide required tasks to produce a good or service economics the study of how humans make choices under conditions of scarcity
economies of scale
when the average cost of producing each individual unit declines as total output increases
What’s the definition of globalization
the trend in which buying and selling in markets have increasingly crossed national borders
What’s the definition of goods and services
a market in which firms are sellers of what they produce and households are buyers
What’s the definition of GDP
measure of the size of total production in an economy; or the total value ($) of all final goods and services produced within a country in a given year
What’s the definition of macroeconomics?
the branch of economics that focuses on broad issues such as growth, unemployment, inflation, and trade balance
What’s the definition of a market?
interaction between potential buyers and sellers; a combination of demand and supply
What’s the definition of a market economy?
an economy where economic decisions are decentralized, private individuals own resources, and businesses supply goods and services based on demand (aka free market)
What’s the definition of microeconomics
the branch of economics that focuses on actions of particular agents within the economy, like households, workers, and business firms
What’s the definition of monetary policy?
policy that involves altering the level of interest rates, the availability of credit in the economy, and the extent of borrowing
private enterprise
system where private individuals or groups of private individuals own and operate the means of production (resources and businesses)
Scarcity
when human wants for goods and services exceed the available supply; limits
specialization
when workers or firms focus on particular tasks for which they are well-suited within the overall production process
theory
a representation of an object or situation that is simplified while including enough of the key features to help us understand the object or situation
traditional economy
typically an agricultural economy where things are done the same as they have always been done
underground economy
a market where the buyers and sellers make transactions in violation of one or more government regulations
What are the factors of production (inputs needed for creating goods and services
Land
Labor
Capital
Entrepreneurship
Economics
the social science that seeks to understand how humans make decisions in the face of scarcity
Economics is
The social science that seeks to understand the choices people make in using scarce resources to meet their unlimited wants
What is the process in which workers select specialized tasks to make a product?
Division of labor
According to the Figure, which section of the graph is the depicting “economies of scale”?
From quantity 0 to 30
The study of economics is primarily concerned with:
Understanding how people, businesses, governments, & societies use scarce resources
