Chapter 1-3 exam Flashcards
the social science concerned with efficient use if scarce (limited) resources to maximize the satisfaction of people’s wants
economics
3 decisión makers?
household, government, and businesses
4 resource categories/ 4 factors of production
land, labor, capital (physical & financial), & entrepreneurship (supply creates its own demand)
2 efficiencies
least cost (productive efficiency)
most wanted (allocative)
Satisfaction = ?
happiness or utility
we assume that people are…?
rational (not random) maximizers
scientific method to quantify economic behaviors steps;?
- an issue/ problem
2.a hypothesis - a theory
the theory for the u.s applies to all other countries & times
Principle/ law
a model?
a set of principles/ laws
the process or finding the explanations to the problem ( based on facts; “what is”
theoretical economics
the process of using the theoretical findings to create the solutions to the problem (based on value judgment; “what it ought to be”)
policy economics
a study to aggregate (national level) decisions
macroeconómics
a study of a specific (a subset of the national level) decision
microeconomics
equation of a straight line
y = a + b*X
y is…
dependent
x is….
independent
a is the….
constant term or vertical intercept on a graph
b is the….
slope or impact of x on y
ceteris paribus is…
holding all other things unchanged
a more general equation..?
y= a + b1 + x1 + ( b2 + x2 + b3 + x3 +….. bn xn)
a negative relationship or….
an inverse relationship
a postive slope or….
a direct relationship
the market system
capitalism
command system
socialism/communism
the ownership of resources;
- private ownership for the market system
- government for the command system
the coordination methods;
- market and price for the market system
- central planning for the command system
the u.s (hybrid system)
capitalistic: 80%
socialistic: 20%
laissez- faire capitalism
pure capitalism ( no government)
hands off or let it be
private property
increase efficiency; protect property
four market structures;
- pure competition
- monopolistic competition
3.oligopoly
4.pure monopoly
determination by consumers of the types and quantities of good and services will be produced wit the scarce resources of the economy
consumer sovereignty
the “votes” that consumers and entrepreneurs cast for production of consumer and capital goods, respectively when they purchase those goods in product and resource markets
dollar votes
productive efficiency
least cost efficiency
creative destruction
ie. dvd vs video cassette
circular flow model
no governments; pure capitalism
the model (demand & supply)
analyzing one product a time ( one market at a time)
the market price (p) and market quantity (q) determination
i. negotiations and agreements between buyers ( consumer p) and sellers ( producers p)— two conflicting market forces
model assumptions like (pure competition—> infinite producers
- large numbers of independently acting producers
- large numbers of independently acting consumers
- standardized (average) products
a schedule or cute that shows various amounts of a product ( Q d = quantity demanded) that consumers are willing and able to purchase at each of a series of possible prices (P) during a specified period of time
Demand (Market Demand)
From individual buyers ( thus individual demand curves) to the specific…
market demand
a schedule or curve showing the amounts of a product that consumers are willing and able to make available for sale (Q= quantity supplied) at each of a series of possible prices (P) during a specified time
Supply ( Markeg Supply)
From individual producers ( this individual supply curves) to..
market supply
producers respond to….
profits when P changes, assuming change cost = 0
