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ECON 1050 > Chapter 1: Intro > Flashcards

Chapter 1: Intro Flashcards

1
Q

What is Economics?

A

Social science that studies the choices people make as they cope with scarcity (& consequences of choices)

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2
Q

Scarcity

A

describes inability to satisfy our wants; idea of limited resources

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3
Q

What is our wants limited by?

A

productive resources that are available

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4
Q

What is an incentive?

A

reward that encourages an action or a penalty that discourages once

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5
Q

Economics is divided into 2 components…

A
  1. Microeconomics
  2. Macroeconomics
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6
Q

What is microeconomics?

A

choices that individuals & businesses make, the way these choice interact in markets & influence of governments

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7
Q

What is macroeconomics?

A

performance of the national economy & global economy

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8
Q

Differentiate between goods & services

A

Goods - physical objects (e.g. phone)
Services - tasks performed by people (e.g. mechanic)

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9
Q

What are the 4 factors of production?

A

Land - natural resources (e.g. minerals, oil, gas)
Labour - time & effort devoted to producing goods & services
Capital - tools, instruments, machines, & buildings used to produce
Entrepreneurship - Develop new ideas of production, business decisions, calculate risk

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10
Q

The quality of labour is dependent on…

A

Human Capital - knowledge & skill that people obtain from education, job training, & work experience

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11
Q

Which factor of production earns the most income

A

labour

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12
Q

Consumption is dependent on…

A
  • Income
    § Land earns rent
    § Labour earns wages
    § Capital earns interest
    § Entrepreneurship earns profit
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13
Q

Self vs Social Interest

A

Self - choice is the best one available for you
Social - best for society as a whole

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14
Q

Production is efficient if…

A

not possible to make someone better off without making someone else worse off

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15
Q

Market Capitalism

A

Economic sx in which individual’s own land & capital & are free to buy & sell land, capital, & goods & services in markets

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16
Q

Centrally Planned Socialism

A

economic sx in which the government owns land & capital, directs workers to jobs, & decides what, how, & for whom to produce
e.g. soviet union

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17
Q

Today’s economy is considered a…

A

mixed economy (combo of market capitalism w/ government regulation)

18
Q

Name some key issues associated w/ market capitalism

A
  • Big corps hold too much power & influence on government
    ○ Government can do a better job allocating resources & redistributing wealth
    ○ More regulation in social interest needed - less corporate greed
    ○ For every winner, there is a loser
19
Q

What is a trade off? Give an example

A

exchange giving up one thing to get something else
e.g. E.g. Choose how to spend Saturday - face trade off between studying & hanging out w/ friends

20
Q

What is rational choice?

A

compares cost & benefits; achieves the greatest benefit over cost for the person making the choice

21
Q

Something is considered beneficial if…

A

gain/pleasure

22
Q

Define opportunity cost

A

highest valued alternative that must be given up to get it

23
Q

What term describes the choice made by comparing the benefits of having a little more of something w/ the cost

A

Margin

24
Q

What is a marginal benefit? Give an example

A

benefit you receive when you increase an activity
○ E.g. extra night of studying may help boost grade

25
Q

What is a marginal cost?

A

opportunity cost (LOSS) you incur when you increase an activity
E.g. marginal cost of studying one more night is the cost of no spending that night w/ your friends

26
Q

Humans act on ____ & make choices in response to ____

A
  1. self interest
  2. incentives
27
Q

What is the difference between a positive statement vs a normative statement?

A

Positive Statements - about what is
- may be right or wrong; can be fact-checked
Normative Statement - about what should be
- depends on values; cannot be tested

28
Q

“planet is warming bc of the amount of coal were burning “ is ______ statement

A

positive

29
Q

“we should cut out use of coal by 50%” is a _____ statement

A

normative

30
Q

positive statements is tested using…..

A

Economic Models - description of some aspect of the economic world that includes features needed for purpose at hand

31
Q

For each news item below, indicate whether it involves a what​, how​, or for whom question.
“Fibre replaces aluminum in airplanes”
“Air Canada reaches deal w/ pilots”
“Asteroid Mission canceled”

A
  1. how
  2. for whom
  3. what
32
Q
  1. Which of the following illustrates an efficient outcome?
    A. Ted pays $10,000 for a new meat slicer that operates at double the speed of his old one
    B. Ted pays his workers a higher wage & his profit takes a dive
    C. Ted cuts the price of his sausages & his profit decreases
    D. Ted cuts the price of his sausages & his profit increases
A

D

33
Q

_____ is an example of ______.
A.Interstate highway; land
B. Margaret Atwood; labour
C. Teenager who cuts lawns during summer holidays; entrepreneurship
D. Banff Park; Capital

A

C

34
Q

You plan to travel to Europe this summer. If you do, you won’t be able to take your usual summer job that pays ​$9,000 for the​summer, and you​won’t be able to live at home for free. The cost of transportation is $2,000, visas cost $100, & living expenses cost $2,000. What is the opportunity cost of your plan to travel to Europe?

A

$13,100 - If u go to Europe you will loss this much money (all expenses added up + won’t be able to get the $9000 you would make at your job)

35
Q

Rational choice is a choice that uses the available resources to _____ of the person making the choice.

A

best achieve the objective

36
Q

A choice on the margin is a choice that is made by comparing all the relevant​_____ systematically and​_____.

Marginal cost is the​_____ that arises from one unit​_____ in an activity.

Marginal benefit is the​_____ that arises from one unit​_____ in an activity.

A

Alternatives, incrementally, opportunity cost, increase, benefit, increase

37
Q

How is economics used as a policy tool?
A. Advise governments on normative goals for the economy
B. Model different economic proposals proposed by the government
C. Predict the effects of all the changes occurring in the economy at the same time
D. Work to predict the outcome of normative statements

A

B

38
Q

The poor pay too much for housing is a ______ statement

A

Normative

39
Q

A ban on smoking will lower the healthcare budget is a ____ statement

A

Positive

40
Q

How do economist try to disentangle cause & effect?

A

Use economic models & natural​experiments, statistical​investigations, and perform economic experiments to test predictions of those models

ECON 1050 (14 decks)

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