Chapter 1: Limits, Alternatives, and Choices Flashcards
A social science concerned with making optimal choices under conditions of scarcity-
Economics
-Scarcity and choice
-Opportunity cost
-Purposeful behavior to increase utility
-Marginal analysis
The Economic Perspective
-Resources are scarce
-Choices must be made
-Opportunity cost
Scarcity and choice
-Rational self-interest
-Individuals and utility
-Firms and Profit
-Desire outcome
Purposeful behavior
-Economic statements that are factual
Positive Economics
-Economic statements that involve value judgements
Normative Economics
-The study of the individual consumer, firm, or market
Microeconomics
-The study of the entire economy or a major aggregate of the economy
Macroeconomics
-Limited income and unlimited wants
-The budget line
-Affordable and unattainable combinations
-Trade-offs and opportunity costs
The Economizing Problem
-Land
-Labor
-Capital
-Entrepreneurial ability
Economic resources
-Employs the other factors of production
-Takes initiative
-Makes strategic business decisions
-Innovates
-Takes risks
Entrepreneurs
-Economic model that shows different combinations of two goods that an economy can produce
Production Possibilities Model
-As more of a good is produced, it’s marginal opportunity cost increases
Law of Increasing Opportunity Costs
-The Production Possibilities curve has a _________ shape
Concave
