Week 1 lecture- 10 principles of economic Flashcards Preview

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Flashcards in Week 1 lecture- 10 principles of economic Deck (44):
1

Graphs:
- Straight-line:
- Horizontal Axis:
- Vertical Axis:
- Zero slope:


SL- linear line.
HA- Independent variable.
VS- Dependent variable.
ZS- variables that unrelated to each other.

2

Independent variable-

the source that causes problems. Things we control and manipulate to see changes in DV.

3

Dependent variable-

The outcome. Changes caused by IV.

4

Direct relationship-

Both axes increase in the same direction.

5

Inverse relationship-

2 axis change in opposite direction.

6

Slope of a straight line-

vertical/horizontal change.

7

Linear equation-

y=a+bx

8

What is a utility?

Pleasure, happiness from consuming a good.

9

Marginal analysis?

"Change" To have marginal benefit, we have to give up marginal cost.

10

Scarcity-

limited resources with unlimited want.

11

Opportunity cost-

To obtain more thing, we give up something else.

12

Purposeful behavior-

Human reflects self-interest.

13

Positive economics-

Focus on facts, and avoiding judgements.

14

Normative economics-

Having value judgement. Bias.

15

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.

16

Production possibility model-

Looking at possible output we have based on what we used.

17

Marginal Benefit-

what people are willing to give up to obtain more goods.

18

Marginal cost-

The value of what is given up to produce additional unit. MB=MC

19

Economics-

The study of how we make decisions upon scarcity.

20

Adam Smith's Division of Labor-

People earn money by specialized in something.

21

Specialization-

Allows workers to work to their advantage. Produce more rapidly and higher quality.

22

Specialization allows:
Economic of scale-
Core competency-

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.

23

Microeconomics-

Focus on individual, firms, industries w/i the economy.

24

Macroeconomics-

Focus on whole economy: growth of production, standard of living, unemployment...

25

Micro-

Make decision based on macro economy (economy is growing out or not).

26

Macro-

Make decision based on micro economy (individual).

27

Fiscal policy-

Gov't spending and taxes.

28

Monetary policy-

Level of interest rates, borrowing.

29

Circular flow diagram

shows how the economy flows by 2 groups: household and firms.

30

Goods and services-

Where firms sell.

31

Labor market-

where households sell.

32

Traditional economy-

Oldest one around. Occupation stay in the family. Most people turned farmers. Little economic development.

33

Command economy-

Economic effort devoted from rulers. Such as medieval manor life where Lord provides land in exchange for protection.

34

Market economy-

Based on private enterprise. Business supply goods and services based on demand. Income based on labor.

35

Market-

Brings sellers and buyers together to exchange.

36

Regulations-

Laws protect people from violence, enforcing legal contract. Price and what to produce are heavily regulated

37

Underground economy-

People exchange w/o gov't involve.

38

Globalization-

Expansion of cultural, political, and economic connection btwn people around the world. Less transportation cost.

39

Exports-

Goods and services that produced and sold abroad.

40

Imports-

Goods and services that produced abroad, sold domestically.

41

Gross Domestic Product (GDP)-

Size of total production in an economy.

42

Capital goods-

Factor of Production created by people.

43

Saving-

someone consumes LESS than their income.

44

Investment-

When ingredient of production are devoted to future income.