Chapter 1 Flashcards
The condition of having unlimited wants and thus never being satisfied
Insatiability
The condition of a good or service being finite or limited in quantity
Scarcity
Being satisfied with what God has provided
Contentment
Oversees the profitable use of his master’s resources, demonstrating wisdom and, most importantly, faithfulness
Steward/Stewardship
What is economics?
Common sense science of how and why people and businesses make the choices they do
What two contradictory ideas result in the necessity of choice?
Explain and define each.
1) instability: everyone has unlimited wants
2) scarcity: everything is finite or limited
What character quality is essential for the Christian to have victory over insatiability? Explain.
Contentment
Being content means that you are satisfied with what God has provided and frees you from the struggle of instability vs. scarcity
Value people place on a good or service, and that value, in turn, helps to determine the price of the good or service
Economic cost
Any tangible (physical) thing that has a measurable life span.
Good
Intangible items
Services
Value ascribed to a good or service be- cause of its nature
Intrinsic value
The satisfaction you receive from the choice you make.
Opportunity benefit
The satisfaction you give up or the regret you experience for not choosing differently.
Opportunity cost
What is the difference between an economic cost and an opportunity cost?
Economic cost: economic cost that people place on a good or service that is reflected by its price
Opportunity cost: the satisfaction the person gives up or the regret felt by not choosing differently
What is the difference between intrinsic value and subjective value?
Intrinsic: the value a person believes a product to have because of its nature, scarcity, and amount of labor needed to produce it
Subjective: the value of a product based solely on the opinion of the buyer
deals with choices made by individual units
Microeconomics
examines large-scale economic choices and issues
Macroeconomics
The approach of observing economic choices and predicting economic events
Positive economics
making value judgments about existing or proposed economic policies
Normative economics
What is the difference between microeconomics and macroeco- nomics? Give examples of each.
Micro: deals with choices made by individual units
-individual households
Macro: deals with large scale economic choices
-what causes a banks interest rate to rise and fall
What is the difference between positive and normative economics? Give examples.
Positive: Entails observing economic choices and predicting economic events
-studying reports to and making a prediction
Normative: entails making value judgments about existing or proposed economic policies
-judging policies as good or bad
What idea did Menger propose that radically changed the way economists should determine an object’s value?
Proposed that an individual’s decision is based on personal utility
So the consumer decides
Common-sense science of how and why people, businesses, and governments make the choices they do
Economics
