The Scope and Study of Economics Flashcards
What has to be done in economics?
Economists have to analyze information and make sense of the economy.
How do economists study and explain. (4 things)
- description- economists describe our economic activity
- Analysis- economists try to find answers to how and why. They look at the data for answers.
- Explanation- After the economists raise theories to answer how and why, they need to communicate and explain
- Prediction- economists want to know what tends to happen and what is likely.
* remember DEAP
Gross Domestic Product (GDP)
It is the dollar value of all final goods, services, and structures produced inside of a country in a year.
The GDP is based on C.I.G.
C= total consumer spending
I=total investment (spending on goods and services)
G= total spending by government
What is a good?
A good is a useful, tangible item that is transferable to others and satisfies an economic want
What is a capital good?
A manufactured good used to produce other goods.
Examples: sewing machine, saw
What is a consumer good?
A good intended for final use by individuals
Examples: water bottle, iphone, clothing
What is a durable good?
Any good that lasts 3 years or more at regular use.
Example: microwave, washing machine, television
What is a nondurable good?
An item that lasts fewer than 3 years
Example: food, pen, medicine
Services
work or labor performed for someone
Example: cleaning houses, digging holes, cutting hair, doing surgery on someone
Consumers
are people who use goods and services to satisfy needs and wants
What is the paradox of value?
It is the contradiction between the low value of essential items vs the high value on nonnecessities.
Example: water vs diamond
Utility
the ability to be useful and give satisfaction to someone
What is wealth?
the accumulation of goods that are tangible, scarce, useful, and transferable
