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Microeconomics > Unit 1 Basic Econ concepts > Flashcards

Unit 1 Basic Econ concepts Flashcards

1
Q

What is economics?

A

The science of scarcity

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2
Q

What is scarcity

A

We have unlimited wants but limited resources

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3
Q

Economics is the study of

A

Choices

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4
Q

All decisions involve

A

Trade-offs

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5
Q

What is trade-offs

A

All the alternatives that we give up when we make a choice

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6
Q

What is opportunity cost

A

Most desirable alternative given up when you make a choice

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7
Q

What is microeconomics?

A

The study of small economic units such as individuals, firms and industries.

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8
Q

What is macroeconomics?

A

The study of the large economy as a whole or economic aggregates

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9
Q

How is economics used?

A

Economics use the scientific method to make generalizations and abstractions to develop theories

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10
Q

What is positive statements?

A

Based on facts. Avoids value judgment

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11
Q

What is normative statements?

A

Includes value judgement

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12
Q

What are the 3 economic questions?

A
  1. What goods and services should be produced?
  2. How should these goods and services be produced?
  3. Who consumes these goods and services?
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13
Q

What is an economic system?

A

The method used by a society to produce and distribute goods and services.

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14
Q

To answer the “how goods and services should be produced” we use?

A

The four factors of production

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15
Q

What are the four factors of production

A
  1. Land
  2. Labour
  3. Capital
  4. Entrepreneurship
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16
Q

What is land?

A

All natural resources that are used to produce goods and services

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17
Q

What is labour

A

Any effort a person devoted to a task for which that person is paid

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18
Q

What are the two types of capital

A

Physical capital
Human capital

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19
Q

What is physical capital?

A

Any human-made resource that is used to create other goods and services

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20
Q

What is human capital?

A

Any skills or knowledge gained by a worker through education and experience

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21
Q

What is entrepreneurship?

A

Ambitious leaders that combine the other factors of production to create goods and services

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22
Q

What are 3 things entrepreneurs do?

A
  1. Take the initiative
  2. Innovate
  3. Act as the risk bearers
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23
Q

What is the product market?

A

The place where goods and services are sold to households

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24
Q

What is the resource (factor) market?

A

The place where resources are sold to businesses

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25
Q

What is self interest?

A

When someone makes decisions they think are best for their own welfare

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26
Q

What is social interest?

A

When people make self-I retested choices that are best for society ( everyone is better off)

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27
Q

What is a circular flow market?

A

A model of the market economy
That shows the circular flow of expenditures and incomes that result from decision makers choices

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28
Q

What is a market?

A

A mechanism that brings together buyers and sellers

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29
Q

What is a goods market?

A

Markets in which goods (or services) are bought and sold

30
Q

What is a factor market?

A

Markets in which factors of production like labour are bought and sold

31
Q

What are real flows?

A

The goods and services and the factors of production

32
Q

What is money flows?

A

The expenditures on goods and services and the incomes that accrue to the factors of production

33
Q

What is the agricultural revolution?

A

7,500 to 10,000 years ago
Moved from being nearly lawless nomads constantly ins watch of food to farmers belonging to various communities with laws and economic exchange

34
Q

What is the industrial revolution?

A

Second economic revolution in the mid 1700s.
New technology allowed people to manufacture on a larger scale.
People moved from rural areas to cities brining new forms of economic organizations and change how people lived.

35
Q

What is the digital revolution?

A

Both what we do and how we do it are being changed quickly due to technology and computers
This one is only taking place in decades.

36
Q

Why is economics a social science?

A

It studies the behaviour of individuals and society with regards to economic livelihood

37
Q

Why do we say our wants are unlimited?

A

Our wants are sometimes insatiable.

38
Q

What is the key underpinning of economics and why economics exists in the first place?

A

Scarcity

39
Q

The choices we make depend on what?

A

Incentives

40
Q

What are incentives?

A

A reward that encourages a choice or a penalty that discourages a choice

41
Q

What is a cost?

A

What must be given up.

Each decision involves a cost

42
Q

What is a benefit?

A

What one gets

Each choice or decision involves a benefit

43
Q

I do I duals make optimal choices at?

A

The margin

44
Q

What is the margin

A

Where marginal benefit equals marginal benefit

45
Q

What is opportunity cost

A

The highest values alternative that is given up

46
Q

What is ceteris peribus

A

All other influences are held constant

47
Q

What are economic models?

A

A description of some aspect of the economic world that includes only those influences that are required for analysis

48
Q

What are economic models used for?

A

Economists use it to help make better business decisions.

49
Q

What are the big economic questions?

A

What, how and for whom goods and services are produced

50
Q

What are goods and services?

A

Things that people value and produce to satisfy wants

51
Q

What is the what question of economics?

A

What goods and services will we produce and in what quantities?

52
Q

Why is the economic how question?

A

How will goods and services be produced?

53
Q

Why are the 4 factors of production?

A

Land, labour, capital, entrepreneurship

54
Q

What is land?

A

Natural resources. Either physical one or anything coming from the land

55
Q

What is labour?

A

Work time and effort people put into making goods and services

56
Q

What is capital?

A

The tools, instruments, machines, buildings, that businesses use to produce goods and services

57
Q

What is entrepreneurship?

A

A human resource that organizes labour, land and capital in the production process

58
Q

What is labours factor payment?

A

Wages/ salary

59
Q

What is capitals factor payment?

A

Interest

60
Q

What is lands factor payment?

A

Rent

61
Q

What is entrepreneurs factor payment?

A

Profit/ loss

62
Q

The quality of labour or how productive someone is depends on what?

A

Human capital

63
Q

What is human capital?

A

The knowledge and skills people obtain from education, work experience, and on the job training

64
Q

What is the for whom question?

A

For whom are foods and services produced

65
Q

What is the circular flow model?

A

A model of the market economy that shows the circular flow of expenditures and incomes that result from decision makers choices and how those choices interact to determine what, how and for whom goods and services are produced.

66
Q

What is a market?

A

A mechanism that brings together buyers and sellers.

67
Q

What is a goods market?

A

Markets in which goods or services are bought and sold

68
Q

What is a factor market?

A

Markets in which factors of production like labour are bought and sold

69
Q

What is a real flow in a market economy?

A

The goods and services and the factors of production

70
Q

What are money flows?

A

The expenditures on goods and services and the incomes that accrue to the factors of production

Microeconomics (4 decks)

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