Unit 1 Flashcards
(21 cards)
opportunity cost
to obtain something, forego next best thing
marginal analysis
do benefits outweigh costs?
principles of economics
generalizations, assumptions, graphs
ceteris paribus
“all other things equal”, isolate variables
utility
satisfaction
purposeful behavior
actions with rationality + self-interest
positive v normative
+ what is, norm what should be
pitfalls
bias, loaded terminology, Post hoc fallacy, fallacy of composition, correlation not causation
post hoc fallacy
false assumption that A preceding B means A caused B
fallacy of composition
single variable might not apply to generalization
wants
unlimited way of expressing desire for G&S
factors of production
labor land, captial, entreprenerial ability
ppt model
full employment, fixed resources, fixed technology, 2 goods produced
Laissez-faire
gov creates outline, doesn’t interact
command system
lack coordination, incentives; gov owns f.o.p
market system
private property, freedom of enterprise/choice, self-interest, competition
specialization
focus on one thing
division of labor
use difference of ability for efficiency
adam smith
first modern economist, invisible hand
invisible hand
guides economy, advancement of society
5 fundamental questions
- what goods/services produced?
- how will they be produced?
- who will get output?
- how will system accommodate change?
- how will system promote progress?
