Chapter 1 Flashcards

1
Q

What is the economic problem

A

Human wants exceed resources available to satisfy them.

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2
Q

Economics

A

The science of scarcity since it concerns the inequality of wants and resources.

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3
Q

Utility

A

Is the economists term for satisfaction or happiness.

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4
Q

Disutility

A

Means unhappiness or dissatisfaction

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5
Q

Good

A

Something that brings utility

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6
Q

Economic good

A

Is so scarce someone will pay for it.

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7
Q

Bad

A

Brings disutility

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8
Q

Economic bad

A

Is so plentiful we are willing to pay to remove it.

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9
Q

4 resources or factors of production

A

Natural resources
Capital
Labor
Entrepreneur ship

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10
Q

Natural resources

A

Or land are the gifts of nature

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11
Q

Capital

A

Human made goods used to make other goods

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12
Q

Labor

A

Human work.

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13
Q

Entrepreneurship

A

Process f bringing together the other factors to produce goods.

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14
Q

What is the goal of business

A

To maximize profits

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15
Q

What is the goal of a person

A

To maximize their utility

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16
Q

Opportunity cost

A

Is what we give when we make a choice.
It is explicit cost plus implicit cost, where explicit costs are paid in money and implicit costs are non money factors such as time.

17
Q

Globalization

A

Is the partial integration of the economies of different countries.

18
Q

What do choices require us to consider

A

Both opportunity costs and benefits.

19
Q

What do the best choices have

A

Highest benefits relative to opportunity costs.

20
Q

What does science rely on

A

Scientific method which starts with observation of the world , which are explained by hypothesis.
Hypothesis must be tested before conclusion can be drawn.

21
Q

What scientists believe about theory

A

Theory can be disproved, but never completely proven.

22
Q

Ceteris paribus is a phrase meaning

A

Everything else held constant.

23
Q

In economics, when we change the value of one variable, we must

A

Hold all variables constant to isolate the effect of the change.

24
Q

Why economists cannot generally do science through experiments

A

As they must use mathematical and statistical models to explain.

25
Q

Model

A

Is a simplification of a part of the world.

26
Q

Microeconomics

A

Considers the individual person, single business or government

27
Q

Macro economics

A

Is concerned about the entire economy, total income and overall employment.

28
Q

Scarcity

A

-means that resources are always scarce relative to wants.

29
Q

Implicit cost

A

-non money costs.

30
Q

Explicit costs

A

-money related

31
Q

Positive theories

A

-that is not to be driven by our personal beliefs, but by data , analysis and observations .
Judgment free
Starts with a question

32
Q

Normative theories

A

-contain value judgment
Starts with an assumption
In here the hypothesis is not testable in a scientific way.