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Economics > Chapter 1: The Economic Way of Thinking > Flashcards

Chapter 1: The Economic Way of Thinking Flashcards

1
Q

desires that can be met by consuming products

A

wants

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2
Q

things necessary for survival

A

needs

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3
Q

lack of resources available to meet all human wants - not a temporary shortage

A

scarcity

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4
Q

study of how people use resources to satisfy wants

  • examines how individuals and societies choose to use resources
  • organizes, analyzes, and interprets data about economic behavior
  • develops theories, economic laws to explain the economy, predict future
A

economics

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5
Q

physical objects that can be bought

A

goods

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6
Q

work one person does for another to pay

A

services

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7
Q

person who buys a good for personal use

A

consumer

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8
Q

a maker of goods or a provider of services

A

producer

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9
Q

resources needed to produce goods and services

- supply is limited

A

factors of production

  1. land
  2. labor
  3. capital
  4. entrepreneurship
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10
Q

all natural resources on or under the ground (water, forests, wildlife, mineral deposits)

A

land

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11
Q

humans and their efforts, time, and talent used to make products (physical and mental)

A

labor

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12
Q

producer’s physical resources (tools)

machines, offices, stores, roads, vehicles

A

capital (“physical” or “real”)

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13
Q

vision, skill, ingenuity, willingness to take risks

  • develop new products, methods of production, marketing, or distributing
  • risk time, energy and money to make a profit
  • anticipate consumer wants
A

entrepreneurship

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14
Q

benefits that encourage people to act in certain ways

A

incentives

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15
Q

benefit or satisfaction gained from using a good or service

A

utility

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16
Q

to make choices, people __________ - make decisions according to best combination of costs and benefits

A

economize

17
Q

an alternative people give up when they make a choice (usually give up to get more of another)

A

trade-off

18
Q

the value of the next best alternative a person gives up

- not the value of all possible alternatives

A

opportunity cost

19
Q

examination of costs, expected benefits of choices

- one of the most useful tools for evaluation relative worth of economic choices

A

cost-benefit analysis

20
Q

additional cost of using one more unit of a good or service

A

marginal cost

21
Q

additional benefit of using one or more good or service

A

marginal benefit

22
Q

simplifies representations of economic forces

A

economic models

23
Q

a model that shows maximum goods or services that con be produced from limited resources
- based on assumptions that simplify economic interactions

A

production possibilites curve

24
Q

producing the maximum amount of goods and services

A

efficiency

25
Q

producing fewer goods and services than possible

A

underutilization

26
Q

as a production switches from one product to another, more resources needed to increase production of second product

A

law of increasing opportunity costs

27
Q

numerical data or information

  • show patterns of human behavior
  • economic models help analyze and interpret data (focus on a limited number of variables)
A

statistics

28
Q

show changes over time

A

line graph

29
Q

usually show a comparison of years

A

bar graph

30
Q

show percentages

A

pie charts

31
Q

studies of behavior of individual players in an economy (includes individuals, families, and businesses)
- prices, costs, profits, competition, consumer/producer behavior

A

microeconomics

32
Q

studies behavior of the economy as a whole (inflation, unemployment, aggregate demand/supply)
- sectors of economy (combination of all individual units - consumer, business, government, etc.)

A

macroeconomics

33
Q 
describes and explains economic behavior as it is 
- uses verifiable facts, no judgements
scientific method used 
- observe data, hypothesize
- proved or disproved
- "concrete", not "abstract"
A

positive economics

34
Q

studies what economic behavior should be

  • makes value judgements to recommend future actions
  • study facts, ask if course of action is good
  • recommendations differ because the values they are based on also differ
A

normative economics

35
Q

founder of modern economics

“Wealth of Nations”

A

Adam Smith

Economics (10 decks)

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