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ECON 2105 > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

our inability to satisfy all our wants

A

scarcity

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2
Q

a reward that encourages an action, or a penalty that discourages one

A

incentive

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3
Q

the social science that studies the choices that individuals, businesses, government, and entire societies make as they cope with scarcity and that influence and reconcile those choices

A

economics

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4
Q

the study of the choices that individuals and business make, the way these choices interact in the markets and the influence of governments

A

microeconomics

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5
Q

the study of the performance of the national economy and the global economy

A

macroeconomics

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6
Q

the objects that people value and produce to satisfy human wants

A

goods and services

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7
Q

physical things that people value and are probably willing to pay money for…though they may not have to pay

A

goods

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8
Q

tasks that accomplish something for people, and which people are willing to pay money for…though they may not have to pay

A

services

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9
Q

knowledge and skills that increases the productivity of labor is

A

human capital

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10
Q

considering all the available options and making the best decision for you, based on your own feelings and preferences

A

self-interested

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11
Q

the best imaginable outcome would be everyone to have infinity of all goods and services

A

social interest

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12
Q

work time and work effort that people devote to producing goods

A

labor

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13
Q

the tools, equipment, buildings, and other constructions that businesses use to produce goods and services

A

capital

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14
Q

the human resource that organizes the other three factors of production: labor, land, and capital

A

entrepreneurship

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15
Q

the income that land earns

A

rent

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16
Q

the income that capital earns

A

interest

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17
Q

the income earned by entrepreneurship

A

profit

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18
Q

resource us is this if it is not possible to make someone better off without making someone else worse off

A

efficient

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19
Q

expansion of international trade, borrowing, lending, and investment

A

globilization

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20
Q

an economic system in which individuals own land and capital and are free to sell land, capital, and goods and services in markets

A

market capitalism

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21
Q

an economic system in which the government dominates

A

centrally planned socialism

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22
Q

market capitalism with government regulation

A

mixed economy

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23
Q

a constraint that involves giving up one thing to get something else

A

tradeoff

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24
Q

a choice that compares costs and benefits and achieves the greatest benefit over cost for the person making the choice

A

rational choice

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25
Q

the benefit of something is the gain or pleasure that it brings and is determined by preferences

A

benefit

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26
Q

a description of a person’s likes and dislikes and the intensity of those feelings

A

preferences

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27
Q

the highest-valued alternative that we must give up to get something

A

opportunity cost

28
Q

when a choice is made by comparing a little more of something with its cost

A

margin

29
Q

the benefit that a person receives from consuming one more unit of a good or service; it is measured as the maximum amount that a person is willing to pay for one more unit of the good or service

A

marginal benefit

30
Q

the opportunity cost of producing one more unit of a good or service

A

marginal cost

31
Q

marginal cost equation

A

the increase in total cost divided by the increase in output

32
Q

a description of some aspect of the economic world that includes only those features of the world that are needed for the purpose at hand

A

economic model

33
Q

a graph that plots the value of one variable against the value of another variable for a number of different outcomes

A

scatter diagram

34
Q

a relationship between two variables that move in the same direction

A

positive relationship/direct relationship

35
Q

a relationship shown by a straight line

A

linear relationship

36
Q

variables that move in opposite directions

A

negative/inverse relationship

37
Q

behavior/social sciences examples

A

Psychology: 300 BC
Sociology: 1300s-1700s
Anthropology: 1700s
Economics: 1776 Adam Smith’s The Wealth of Nations

38
Q

What makes economics different from other social and behavioral sciences

A

economics is particularly concerned with the choices people make, response to scarcity, and the incentives people face

39
Q

examples of the choices that people make

A

what they buy, how much education they get, whether they smoke cigarettes

40
Q

examples of scarcity

A

food people eat and available dorm rooms

41
Q

examples of incentives people face

A

high gas prices, this might make me sick, my mom will be furious

42
Q

two different types of economics

A

microeconomics: individual people, businesses, or industries and the influence of government on people and businesses (whether a high school senior skips class, prices and quantities of minivans sold in 2018, how a tax on cigarettes will affect teen smoking rates)
macroeconomics: national economics or the global economy (unemployment rates in China vs the US, the value of everything produced in Canada in 2018, how much stuff can you buy with $1 today versus in the 1950s)

43
Q

Two Big Economic Questions

A
  1. What, how, and for whom

2. Do choices made in the pursuit of self-interest also promote the social interest?

44
Q

Is it possible to do something that increases how productive one hour of your labor can be?

A

Yes

45
Q

How do we produce those goods and services?

A
  1. Land: natural resources, anything provided by nature (field, oil, water, and air)
  2. Labor: Physical and mental effort of humans
  3. Capital: non-human tools, buildings, machines, etc. that are used to produce goods and services
  4. Entrepreneurship: the development of new ideas about how to organize land, labor, and capital to create things of value
46
Q

Once those goods and services are produced, who gets to have them?

A
  • land earns rent
  • labor earns wages
  • capital earns interest
  • entrepreneurship earns profit

All of these make up someone’s income, which they can use to buy the goods and service they want.
Earning more income equates to being able to buy more stuff, and more expensive stuff

47
Q

What question

A

what we produce varies across countries and changes over time

48
Q

how question

A

how we produce is described by the technologies and resources we use

49
Q

for whom question

A

who consumes the goals and services that are produced depends on the income that people earn

50
Q

Who earns the most income

A

labor

51
Q

Is social interest possible?

A

No, because we live in a world of scarcity

52
Q

Two key concepts help us think about what is actually in the social interest

A

efficiency and faireness

53
Q

Examples of issues that promote self-interest over social interest

A
  • globalization
  • information-age monopolies
  • climate change
  • COVID pandemic
54
Q

Economic way of thinking

A
  • a choice is a tradeoff
  • people make rational choices by comparing benefits and costs
  • benefit is what you gain from something
  • cost is what you must give up to get something
  • most choices are “how much” choices made at the margin
  • choices respond to incentives
55
Q

Central idea of economics

A

we can predict the self-interested choices that people make by looking at the incentives they face

56
Q

might be right or wrong, but we can test it by checking facts

A

positive statement: must test positive statements

57
Q

what ought to be, depends on values and cannot be tested

A

normative statement (we ought to cut our use of coal by 50%)

58
Q

Jobs for economists

A

market research analyst: 57%
financial analyst: 37%
budget analysis: 4%
economist: 2%

59
Q

market research analyst

A

works with data on buying patterns and tries to forecast the likely success of a product and the price that buyers are willing to pay for it

60
Q

financial analyst

A

studies trends, fluctuations in interest rates, stocks, and bond price, tries to predict the cost of borrowing, and returns on investements

61
Q

if all other relevant things remain the same

A

ceteris paribus

62
Q

Skills for economic jobs

A 
critical thinking skills
analytic skills
math skills
writing skills
oral communication skills
63
Q

Patterns to look for in graphs

A

variables move in the same direction
variables move in opposite directions
variables have a maximum or a minimum
variables are unrelated

64
Q

vertical line

A

x constant

65
Q

horizontal line

A

y constant

ECON 2105 (1 decks)

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