1.1 Flashcards
microeconomics
branch of econ that examines the behavior of individual decision-making units in the economy
macroeconomics
branch of econ that examines the economy as a whole to obtain a broad or overall picture of the economy
aggregates
wholes or collections of many individual units (sum of consumer behaviors and of firm behaviors) and total income and output of the entire economy
scarcity
idea that resources are insufficient to satisfy unlimited human needs and wants
choice
must be made about what will be produced and what will be foregone
efficiency
making the best possible use of scarce resources to avoid waste
allocative efficiency
any good or service is produced to the point where the last unit provides consumers with a marginal benefit equal to the marginal cost of production
equity
idea of being fair or just in an economic way
economic well-being
concept that refers to levels of prosperity, economical satisfaction and standards of living among members of society
aspects of economic well-being
- job and housing
- goals and potential
- quality of life
- all of the above
sustainability
maintaining the ability of environment to continue to produce and satisfy needs and wants into the future
change
- in econ theory - between situations caused by changes in variables
- in real world - changes in world in which economical events occur
interdependence
idea that economical decision-makers interact with and depend on each other (individuals, communities, nations, groups of nations); no one is self-sufficient
what happens with increasing globalization
interdependence increases
intervention
act of government of becoming involved with the workings of markets in order to correct for the market’s defficiencies
the fundimental problem with economy
scarcity and choice
goods
physical objects people need and want
services
non-physical activities people need and want
resources
inputs to produce goods and services
resources =
factors of production
which factors of production are there
land, labour, capital, entrepreneurship
land
natural resources: agricultural and non-agricultural, and everything under or above (minerals, oil, underground water)
labour
physical and mental effort that people contribute to the production of goods and services (workers)
capital =
capital good, investment good
which types of capital are there
physical, human, natural and financial capital
physical capital
man-made inputs (machinery, tools, factories, road systems, airports)
human capital
skills, abilities, knowledge acquired by people, that make them more productive
natural capital
environmental capital - expanded ‘land’ (includes everything in land + additional resources (biodiversity, ozone))
financial capital
investments in financial instruments (shares, stocks, bonds, funds)
entrepreneurship =
management
entrepreneurship
human skill involving the ability to innovate by developing new ways of doing things
opportunity cost
the value of the next best alternative that must be sacrificed to obtain something else (in monatery and time values)
free goods
any good that is not scarce and therefore has no opportunity cost
economic goods
any good that is scarce, either because it’s a naturally-occuring scarce resource, or because it’s produces by scarce resources - opportunity cost bigger than 0
economic goods that are available free of charge
- goods provided by the government
- certain natural resources - common pool resources
