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Econ 101 > Chapter 1 > Flashcards

Chapter 1 Flashcards

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1
Q

1st Principle of Economy

A

People face of trade off

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2
Q

2nd Principle of Economy

A

The Cost of Something Is What you Give Up to Get it

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3
Q

3rd Principle of Economy

A

Rational People Think at the Margin

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4
Q

4th Principle of Economy

A

People Respond to Incentives

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5
Q

5th Principle of Economy

A

Trade Can Make Everyone Better Off

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6
Q

6th Principle of Economy

A

Markets Are Usually a Good Way to Organize Economic Activity

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7
Q

7th Principle of Economy

A

Governments Can Sometimes Improve Market Outcomes

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8
Q

People face of trade off

A

To get something that we like, we usually have to give up something else that we also like.

Making decision requires trading off one goal against another.

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9
Q

The Cost of Something Is What You Give Up to Get It

A

Opportunity Cost.

Sometimes, the cost of an action is not as obvious as it might first appear.

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10
Q

Rational People Think at the Margin

A

Economists normally assume that people are rational.

Rational People make decisions by comparing Marginal Benefits or Marginal Costs.

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11
Q

People Respond to Incentives

A

Rational people respond to incentive

Ex: At higher price
An incentive for buyers to purchase less.
An incentive for sellers to produce more.

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12
Q

Trade Can Make Everyone Better Off

A

By trading with others, people can buy a greater variety of goods and services at lower cost.

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13
Q

Markets Are Usually a Good Way to Organize Economic Activity

A

○ Firms decide whom to hire and what to make.

Households decide which firms to work for and what to buy with their incomes.

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14
Q

Governments Can Sometimes Improve Market Outcomes

A

Invisible hand only work if government enforces the rules and maintains the institutions.

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15
Q

Scarcity

A

The limited nature of society’s resources

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16
Q

Economics

A

The study of how society manages its scarce resources

17
Q

Efficiency

A

The property of society getting the most it can from its scarce resources

18
Q

Equality

A

The Property of distributing economic prosperity uniformly among the members of society

19
Q

Opportunity Cost

A

Whatever must be given up to obtain some items

20
Q

Rational People

A

People who systemativally and purposefully do the best they can to achieve their objectives

21
Q

Marginal Change

A

A small incremental adjustment to a plan of action

22
Q

Marginal Cost

A

The additional cost to produce each additional unit

23
Q

Marginal Benefit

A

A maximum amount a costumer is willing to pay for an additional goof or services.

24
Q

Incentives

A

Something that induces a person to act.

25
Q

Market Economy

A

An economy that allocates resources through the decentralized decisiions of many firms and house holds as the interact in markets for goods and services.

26
Q

Property Rights

A

The ability of an individual to own and exercise control over scarce resources

27
Q

8th Principle of Economy

A

A Country’s Stantard of Living Depends on Its Ability to Produce Goods and Services

28
Q

9th Principle of Economy

A

Price Rise When the Government Prints Too Much Money

29
Q

10th Princuple of Economy

A

Society Faces a Short-Run Trade-Off between Infaltion and Unemployement

30
Q

Market Failure

A

A situation in which a market left on its own fails to allocate resourcesefficiency

31
Q

Externity

A

The impact of one person’s actions on the well-being of a bystander

32
Q

Market Power

A

The ability of a single economic action (or small group of actors) to have a substanctial influence on market prices

33
Q

Productivity

A

The quantity of goods and services produced from each unit of labor input

34
Q

Inflation

A

An increase in the overall level of prices in the economy

35
Q

Business Cycle

A

Fluctuations in economic activity, such as employment and production

36
Q

A Country’s Stantard of Living Depends on Its Ability to Produce Goods and Services

A

Countries’ productivity creates different living standard among them

The growth rate of a nation’s productivity determines the growth rate of its average income

37
Q

Price Rise When the Government Prints Too Much Money

A

Inflation can occur.

High inflation imposes various costs on society.

38
Q

Society Faces a Short-Run Trade-Off between Infaltion and Unemployement

A

Increase the amount of money can raises prices in the long run
But it becomes complex when it comes to short-run

Stimulates the overall level of spending and thus the demand for goods and services
Higher demands cause firms to raise their prices, but it also encourages them to hire more workers and produce more
More hiring means lower unemployment

Econ 101 (1 decks)

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