Week 1 Flashcards
- What is Economics? Why is it important?
- Difference between Microeconomics and Macroeconomics
- How Economists Use Theories and Models to Understand Economic Issues
- How Economies can be Organized: Overview of Economic Systems
What do Economists call it when we don’t have all the data we need to make a perfect decision?
Imperfect data
Why is the internet affecting the economics of a society?
Because of the speed that information disseminates through the populace.
Why is studying economics important to you?
What is the relationship between production and division of labor?
Why is scarcity significant?
What do you call the study of how humans make decisions in the environment of scarcity?
Economics!
What do you call it when the desire for good, services or resources exceeds what is available?
Scarcity
What does scarcity force us to do?
Make decisions. Sometimes, difficult decisions.
Who first proposed the idea of “The division and specialization of labor”?
Adam Smith in his book, The Wealth of Nations
What is the primary concept of “division of labor”?
You produce a good or service by dividing it into a number of tasks that different workers perform, instead of all being done by one person.
How is the “division of labor” concept used within a business?
Different employee tiers, or any range of jobs within a business is using this concept.
What is the primary purpose, and theory behind, dividing tasks?
To produce a greater quantity of output
What is the observation that Led Smith to this concept?
A factory of 10 people, who each made a pin separately would produce 200 pins. A factory of 10 people with divided task could produce 48,000 pins. An increase of 24,000%
What is the name for a particular small job that allows workers to focus on a part of the production process where they have an advantage?
Specialization
What are some of the benefits of “Specialization”?
Effectiveness, efficiency, and Economies of scale
What is the definition of the term “Core Competency”
when a business focuses on one or very few products and is more successful that average in that area.
What is the definition of the term “economies of scale”?
When the level of production increases, the average cost of producing each individual unit declines
What is the ultimate result of workers who can focus on their preferences and talents, and learn to do specialized jobs better?
They can work in larger organizations and the society as a whole can produce and consume far more than if each person tried to produce all of their own goods and services.
What concept is essentially a force acting against the problem of scarcity?
The division and specialization of labor.
Why does increased specialization require increased trade?
Since the specialized worker produces less on their own, they have to trade more to acquire the goods they need.
Specialization only makes sense if…
workers can use the pay they receive from their jobs, to purchase other goods and services they need.
The study that focuses on the actions of individual agents within an economy, like households, workers and businesses is called…
Microeconomics
The study that looks at the economy as a whole, and focuses on broad issues such as production growth, unemployment, inflation, government deficits and import/export levels is called…
Macroeconomics
