unit 1 test Flashcards
(89 cards)
what is economics?
the study of how individuals and societies choose to allocate scarce resources, why they choose to allocate them that way, and the consequences of those decisions
what is capital?
things produced to produce other things (tools, not financial assets)
what is microeconomics?
a social science that focuses on choices made by individual actors
what is macroeconomics
a social science that focuses on the overall ups and down in the economy
what are positive economics?
a statement that can be tested in theory regardless if agreeable or not
what are normative economics?
a statement that speaks from morals, opinions, and ethics and cannot be tested
machinery in a factory is an example of _______
capital
what is ceteris paribus?
a Latin phrase meaning “all else equal” (all things are equal)
what is scarcity?
it is essential to economics and is the fact that there is a limited amount of resources to satisfy unlimited wants
what is opportunity cost?
the desirable alternative given up as a result of a decision
“people who aren’t working, even though they could work, is wrong and unfair” is a _________ statement
normative
“the price of milk should be $6 a gallon to give dairy farmers a higher living standard and to save the family farm” is a _________ statement
normative
“programs like welfare reduce the incentive for people to work” is a ________ statement
positive
“raising taxes on the wealthy to pay for government programs grows the economy” is a ________ statement
positive
what is absolute advantage?
when a producer, given the same amount of time and resources, can produce more of a given item than another producer
what is comparative advantage?
when a producer has a lower opportunity cost than another producer
“raising taxes on the wealthy slows economic growth” is a ________ statement
positive
what is a free resource?
something that has abundant amounts where everyone gets as much as they like
what is law of demand?
as prices increase, the quantity demanded decreases. as prices decrease, the quantity demanded increases
what is quantity demanded?
a movement along the curve
caviar is an example of a _______________
scarce resource
what are substitutes?
when the rise in price of one good leads to an increase in demand of another good
what are complements?
goods that are consumed together
what are normal goods?
goods that increase in its demand due to a rise in consumers’ income