Week 1 lecture- 10 principles of economic

Question 1

Graphs:

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

Answer 1

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

Question 2

Independent variable-

Answer 2

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

Question 3

Dependent variable-

Answer 3

The outcome. Changes caused by IV.

Question 4

Direct relationship-

Answer 4

Both axes increase in the same direction.

Question 5

Inverse relationship-

Answer 5

2 axis change in opposite direction.

Question 6

Slope of a straight line-

Answer 6

vertical/horizontal change.

Question 7

Linear equation-

Answer 7

y=a+bx

Question 8

What is a utility?

Answer 8

Pleasure, happiness from consuming a good.

Question 9

Marginal analysis?

Answer 9

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

Question 10

Scarcity-

Answer 10

limited resources with unlimited want.

Question 11

Opportunity cost-

Answer 11

To obtain more thing, we give up something else.

Question 12

Purposeful behavior-

Answer 12

Human reflects self-interest.

Question 13

Positive economics-

Answer 13

Focus on facts, and avoiding judgements.

Question 14

Normative economics-

Answer 14

Having value judgement. Bias.

Question 15

4 basic resources

Answer 15

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.

Question 16

Production possibility model-

Answer 16

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

Question 17

Marginal Benefit-

Answer 17

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

Question 18

Marginal cost-

Answer 18

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

Question 19

Economics-

Answer 19

The study of how we make decisions upon scarcity.

Question 20

Adam Smith’s Division of Labor-

Answer 20

People earn money by specialized in something.

Question 21

Specialization-

Answer 21

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

Question 22

Specialization allows:
Economic of scale-
Core competency-

Answer 22

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.

Question 23

Microeconomics-

Answer 23

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

Question 24

Macroeconomics-

Answer 24

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

Question 25

Micro-

Answer 25

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

Question 26

Macro-

Answer 26

Make decision based on micro economy (individual).

Question 27

Fiscal policy-

Answer 27

Gov't spending and taxes.

Question 28

Monetary policy-

Answer 28

Level of interest rates, borrowing.

Question 29

Circular flow diagram

Answer 29

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

Question 30

Goods and services-

Answer 30

Where firms sell.

Question 31

Labor market-

Answer 31

where households sell.

Question 32

Traditional economy-

Answer 32

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

Question 33

Command economy-

Answer 33

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

Question 34

Market economy-

Answer 34

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

Question 35

Market-

Answer 35

Brings sellers and buyers together to exchange.

Question 36

Regulations-

Answer 36

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

Question 37

Underground economy-

Answer 37

People exchange w/o gov't involve.

Question 38

Globalization-

Answer 38

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

Question 39

Exports-

Answer 39

Goods and services that produced and sold abroad.

Question 40

Imports-

Answer 40

Goods and services that produced abroad, sold domestically.

Question 41

Gross Domestic Product (GDP)-

Answer 41

Size of total production in an economy.

Question 42

Capital goods-

Answer 42

Factor of Production created by people.

Question 43

Saving-

Answer 43

someone consumes LESS than their income.

Question 44

Investment-

Answer 44

When ingredient of production are devoted to future income.