#1.1 : Revisiting Economics as Social Science & Applied Science Flashcards
What is economics?
It is the effective management of scarce resources to satisfy human wants and needs.
Why is it a social science?
Because it studies how people relate to one another and how they consume resources.
Why is it an applied science?
Because economics can be used/applied in real-world situations.
What does Adam Smith’s book states?
It states how the movement of people can greatly affect the environment and one another.
What are some of the concepts introduced by Adam Smith?
invisible hand (let the people be), free market, capitalism, and laissez-faire
What is scarcity and why is it different from shortage?
Scarcity is the forever limitation of resources, while shortage only experience limited supplies in a certain period of time.
Difference of wants and needs.
Wants are things that give pleasure but isn’t essential, while needs are things that are important for survival.
4 limited resources
land, labor, capital, and entrepreneurship
It is the process of creating goods and services.
Production
Why is money not a capital resource in economics?
Because it cannot produce goods or services. Capital only refers to tools, machinery, and other productive equipment in economics.
3 economic questions
What to, how to, and for whom to produce
3 economic systems
Market (private), Command (government), and Mixed (both)
Difference of decision-making and rationality.
Decision-making determines how individuals or groups of people behave given certain changes in the
economy, while rationality assumes that individuals are consistent and logical in their decision-making.
Difference of opportunity cost and trade-off.
Opportunity cost is the cost of giving up an alternative when making a choice, while trade-off results in either satisfaction of dissatisfaction.
It is the sustained elevation of an entire society and social system toward a better and more humane life.
Economic development
