Chap 1.1 Flashcards
what 2 fundamental facts is econ derived from
- material want is unlimited
- resources are limited
what is the goal of the consumer
maximum satisfaction
what is the goal of buisness firms
profit
what is the goal of the government
satisfy the wants of citizens
describe the wants of humans
numerous, expand and diversify through time
whats resource
its anything natural or man made that can be used in production of goods and services
whats economic resource
theyre the means to produce goods and services
def scarcity
refers to a physical condition where the
quantity desired of a particular resource exceeds the quantity available
whats the central aim of economics
efficient use of the
scarce resources by minimizing loss so as to get the maximum
possible satisfaction
whats econ
a science which studies the allocation of
scarce resources in production, consumption and distribution
of goods and services to attain the maximum fulfillment of
society’s material wants
what does the implication of cost lead to
cost of the forgone opportunity aka opportunity cost
whats an opportunity cost
Opportunity cost is basically what you give up when you choose one option over another. it’s about the value of the next best alternative you didn’t choose.
def macroeconomics
is a branch of economics which studies the
economy as a whole
def microeconomics
It is a branch of economics which deals with the decision making behavior of individual economic agents such
as households, business firms. it studies flow of goods to consumers and their prices as well as the economic resources
what are major economic problems
what to produce
how to produce
for whom to produce
what does the ppf show
due to the capacity of producing combinations of goods being constrained by its limited resources. this curve shows the various combinations of 2 types of goods that an economy can produce when its resources are fully employed.
what are the assumptions to draw ppf
- economic resources fixed over the time period are considered
- all factors are fully employed
- some resources inputs are better suit for the production of one good than another
- tech doesnt change overtime
what does limit on resources imply
limits to total output that can be produced
what does limit on total output mean
This means that if production of good X is
increased then production of good Y must be decreased because resources would be transferred
from Y to X.
whats the law of opportunity cost
The law of increasing opportunity cost says that as you produce more of one thing, the opportunity cost of producing additional units of that thing goes up
what does an economic growth cause
- PPC shifts to the right
- capital accumulation
- technical progress
what does contraction to the PPF cause
-shift to the left
- droughts
- floods
-earthquakes
whats an asymmetrical change in technology
if theres change in one sector
whats a symmetrical change in technology
if theres change in both sectors
what are the economic ways of thinking
- rational choice
- cost
- benefit
- choosing at margin
whats marginal benefit
what you gain when you get one more unit of something.
whats marginal cost
what you must give up to get one additional unit of it
