1 Flashcards
Economics is the study of___
The choices people make to attain their goals, given their scarce resources
When economists develop models designed to explain the choices people make, they generally assume that____
People are rational
A market is a group of ___ of a good or service and the institution or arrangement by which they come together to trade.
Buyers and sellers
Societies organize their economies in 2 main ways to answer the 3 questions of what, how & who. A society can have a ___ or a ___
- Centrally planned economy
* Market economy
___ occurs when a good or service is produced at the lowest possible cost.
Productive efficiency
___ occurs when production is in accordance with consumer preferences
Allocative efficiency
Equity is ___
The fair distribution of economic benefits
Opportunity cost is ___
The highest valued alternative that must be given up to engage in an activity
Trade-offs force society to make choices when answering the following 3 questions:
1.
2.
3.
- WHAT goods & services will be produced?
- HOW will the goods & services be produced?
- WHO will receive the goods & services produced?
___ is concerned with WHAT IS, & ___ is concerned with WHAT OUGHT TO BE
- Positive analysis
* Normative analysis
Economics is about ___ analysis, which measures the ___
- Positive analysis
* measures the costs & benefits of different courses of action
Economics is a social science because ___
- it applies the scientific method to the study of the interactions among individuals
- considers human behavior – particularly decision-making behavior
- it’s based on studying the actions of individuals
Macroeconomics is ___
The study of the economy as a whole, including topics such as inflation, unemployment & economic growth
The primary difference between product markets & factor markets is that ___
Product markets are markets for goods
While factor markets are markets for factors of production – labor, capital, natural resources & entrepreneurial ability
___ are the rights individuals or firms have to the exclusive use of their property, including the right to buy or sell it
Property rights
In general, the term “ceteris paribus” means ___
All else equal
A ___ is someone who operates a business, bringing together the factors of production– labor, capital, and natural resources– to produce goods & services
Entrepreneur
In economic terminology, the inputs used to produce output are referred to as ___
Factors of production
In a free market, the actions people take are largely determined by ___
The motivation of financial reward
A ___ exists when the government places few restrictions on how a good or a service can be produced or sold or on how a factor of production can be employed
Free market
