Chapter 2- Models Flashcards
1
Q
Normative Economics
A
Makes prescriptions about the way the economy should work
2
Q
Positive Economics
A
Branch of Econ analysis that describes the way the economy actually is works
3
Q
Income Distribution
A
Way in which total income is divided among the owners of the various factors of production
4
Q
Firm
A
Organization that produces goods and services for sale
5
Q
Household
A
Person/group that share their income
6
Q
Circular-flow Diagram
A
Represents the transactions in an economy by flow around a circle
Put in pic once have computer
7
Q
Comparative Advantage
A
Said to have this when opportunity cost for producing a certain output is lower than another entity’s.
8
Q
Other Things Equal Assumption
A
Means that all other relevant factors remain unchanged when building a model.
