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Econ 201 > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

Economics is concerned with

A

Efficient use of scarce resources to obtain the maximum satisfaction of societies unlimited wants

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2
Q

scarcity

A

restricts options and requires choices

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3
Q

opportunity cost

A

what is forgone for that choice

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4
Q

scarce resources 6

A

land
labour
- human capital
-capital
- investment
- entrepreneural ability

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5
Q

purposeful behaviour

A

people pursue oppportunities in order to increase their utility
- people make decisions with desired outcome in mind
- RATIONAL

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6
Q

marginal analysis

A

comparing costs and benefits

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7
Q

the individual 4

A
  1. facing trade-offs (must make best decisions)
  2. opportuninty costs
  3. choosing a little more or a little less (marginal analysis)
  4. influcence of incentives (taking BA OR MA)
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8
Q

interaction among individuals

A
  1. specialization and trade (make both countries best at what they’re producing)
  2. the effectiveness of markets (coordinating trade)
  3. role of govnt` (make sure competition is avaliable)
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9
Q

the economy as a whole

A

8 production and the standard of living (more produced better life)
9. money and inflation (income can imporve life)
10. inflation- unemployment trade off (one goes up other goes down)

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10
Q

scientific method

A

observe, formulate hypothesis, test, accept/reject, continue to test hypothesis

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11
Q

capital

A

NoT money, physical capital\
- tools, machines, factories

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12
Q

entreprenuers

A

takes incentive, business decisions, innovates, RISK taker

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13
Q

margin

A

extra

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14
Q

micro econ

A

concerned with individual units such as industries firms and households
- worms eye view

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15
Q

macro econ

A

concerned with economy as a whole
-birds eye view

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16
Q

positive economics

A

analysis of facts to establish cause and effect relationships (WHAT IS)
- it IS 25 degrees

17
Q

normative econ

A

deals with judgements of what economy should be (WHAT OUGHT TO BE)
- it SHOULD be 25 out

18
Q

entrepreneurs economic functions

A
  • takes initiative
  • makes business decisions
  • innovates
  • bears risk
19
Q

production possibilities model

A

illustrates production choices

20
Q

production possibilities model assumptions

A
  • full employment (all avaliable resouces being used)
  • fixed resources
  • fixed technology
  • two goods (consumer and capital- tools)
21
Q

what law makes production possibilities curve concave

A

law of increasing opportunity

22
Q

unemployment

A
  • economy may not be operating at full employment
  • points INSIDE of production possibility cueve
23
Q

inside the PPC is what

A

unemployment or failure to achieve production efficienty

24
Q

what is a right shoft in PPC mean

A

economic growth. more resources, land, capital, more workers

25
Q

a growing economy has

A
  • increas ein factor supplies
  • imporoved factor quality
  • tech advances
26
Q

pitfalls to economic reasoning

A
  • biases (personal opinion)
  • loaded termonology (confuses concept)
  • fallacy of composition (whats good for one is not good for all)
  • post hoc fallacy (we assume an event caused another event… wearing lucky socks)
  • correlation and causation ( what is cause is effect. people with education have high wages)
27
Q

present and future choices

A
  • save now for a better future
  • present economic growth is focused on demand rather than saving for future
  • overtime if saving, graph will grow outwards
28
Q

rational self-interest

A
  • not thte same as selfishness
  • charities
28
Q

rational self-interest

A
  • not thte same as selfishness
  • charities
29
Q

economic principal

A

statement about economic behaviour or the economy that enables predication of the profitbale effects of vertain actions. combos of principals are incorporated into models

Predicting profit on certain economic moves.

30
Q

things to know about economic principals

A
  • generalizations (typical or average consumers)
  • other things equal assumption
  • expressed graphically
31
Q

budget line

A

figuring out a econ prob by comparing 2 products consumers can purchase at a specified income
- varies with income

32
Q

land

A

includes all natural resources used in production process

33
Q

consumer goods vs capital goods

A

consumer satisfy wants directly, capital do so indirectly, production

34
Q

PPC cueve demonstrates what

A
  • different combos of goods and services that society can potentially produce in a full employed econ

Econ 201 (7 decks)

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