Flashcards in Week 1 lecture- 10 principles of economic Deck (44):
- Horizontal Axis:
- Vertical Axis:
- Zero slope:
SL- linear line.
HA- Independent variable.
VS- Dependent variable.
ZS- variables that unrelated to each other.
the source that causes problems. Things we control and manipulate to see changes in DV.
The outcome. Changes caused by IV.
Both axes increase in the same direction.
2 axis change in opposite direction.
Slope of a straight line-
What is a utility?
Pleasure, happiness from consuming a good.
"Change" To have marginal benefit, we have to give up marginal cost.
limited resources with unlimited want.
To obtain more thing, we give up something else.
Human reflects self-interest.
Focus on facts, and avoiding judgements.
Having value judgement. Bias.
4 basic resources
1. Land- natural resources.
2. Labor- physical and mental talents of individuals.
3. Capital- fund, money, investment.
4. Entrepreneurial ability- combines land, labor, and capital. Putting together to produce good and services.
Production possibility model-
Looking at possible output we have based on what we used.
what people are willing to give up to obtain more goods.
The value of what is given up to produce additional unit. MB=MC
The study of how we make decisions upon scarcity.
Adam Smith's Division of Labor-
People earn money by specialized in something.
Allows workers to work to their advantage. Produce more rapidly and higher quality.
Economic of scale-
Focus on advantages.
Economic of scale- more production= cost drops.
Core competency- business focus on fewer products is more successful.
Encourage workers to invent and learn.
Focus on individual, firms, industries w/i the economy.
Focus on whole economy: growth of production, standard of living, unemployment...
Make decision based on macro economy (economy is growing out or not).
Make decision based on micro economy (individual).
Gov't spending and taxes.
Level of interest rates, borrowing.
Circular flow diagram
shows how the economy flows by 2 groups: household and firms.
Goods and services-
Where firms sell.
where households sell.
Oldest one around. Occupation stay in the family. Most people turned farmers. Little economic development.
Economic effort devoted from rulers. Such as medieval manor life where Lord provides land in exchange for protection.
Based on private enterprise. Business supply goods and services based on demand. Income based on labor.
Brings sellers and buyers together to exchange.
Laws protect people from violence, enforcing legal contract. Price and what to produce are heavily regulated
People exchange w/o gov't involve.
Expansion of cultural, political, and economic connection btwn people around the world. Less transportation cost.
Goods and services that produced and sold abroad.
Goods and services that produced abroad, sold domestically.
Gross Domestic Product (GDP)-
Size of total production in an economy.
Factor of Production created by people.
someone consumes LESS than their income.