CHAPTER ONE Flashcards
Factors of Production
Land, labor, capital
What does the market decide?
What, how, when
Factors of Production
Land, labor, capital, entrepreneurship
Cateris paribus assumption?
All other things being equal
Positive statements?
Concerned with the facts and what actually is happening, or what actually will happen.
Normative statements?
Includews opnion based words like, should, too much/little
PPC graph shows what?
Scarcity, choice, opportunity, cost and efficincy
Opportunity cost?
The loss of potential gain from other alternatives when one alternative is chosen
Trade-off
any situation where making one choice means losing something else, usually forgoing a benefit or opportunity
Scarcity?
deals with how people satisfy unlimited wants and needs with limited resources.
What part of econ does the circular flow of income model show?
Macroeconomics
Transfer payments?
Payments to individuals are not the result of an icrease output. Ex: Unemployment benefits
In each sector of the circular flow of income model ther is a_______
One leakage and one injection
Budget deficit?
Governments are able to spend more money than they earn in taxes by borrowing money
Trade imbalances?
Countries spend more on imports than earn from exports.
Planned market/Command market?
governments control facets of economic production.
Free market?
prices are determined by unrestricted competition between privately owned businesses.
Free market cons?
- Demerit goods over provided(High prices)
- Unerprovided(Not for all, only those who can afford it)
- Overuse of resources=polution (High-profit low production cost)
- Orphan, sick, unemployed can’t take care of themself
- High firms may dominate industries, leading to high prices.
Planned market cons?
- Misallocation of resources, shortages, and surpluses
- No price system=uneffcient resources
- Hard to motivate employees who gain no profit of firm
- Loss of personal liberty and freedom
Dermit goods?
Things that are bad for people(Drugs)
Merit goods?
Things good for people(Education & Healthcare)
Capital goods?
Tools of the trade
Consumer goods?
goods bought and used by consumers
Human capital?
Knowledge
Publics goods?
No one can be excluded from public goods. Can not be consumed.(Damp & school)
Subsidy?
Benefit given to an individual, business, or institution, usually by the government, typically given to remove some type of burden,
Equity?
the amount of capital invested or owned by the owner of a company.
Tariff
A tariff is a tax imposed by a government on goods and services imported from other countries that serves to increase the price and make imports less desirable, or at least less competitive, versus domestic goods and services.
Durable goods
goods not for immediate consumption and able to be kept for a period of time.Ex: automobiles, furniture
Veblen goods
good for which demand increases as the price increases.. Ex: designer jewelry, yachts, and luxury cars.
Conspicuous consumption
luxury goods that are easily recognizable as high-end, expensive items.
Structural unemployment
is long-lasting unemployment that comes about due to shifts in an economy. Often brought about by technological changes
Cyclical unemployment
is the component of overall unemployment that results directly from cycles of economic upturn and downturn. . Ex: when construction workers were laid off during the Great Recession following the financial crisis
Frictional unemployment
Frictional unemployment is the time period between jobs when a worker is searching for or transitioning from one job to another.
Marginal utility
the change in total utility from consuming one more or one less of an item. For example, the marginal utility of a third slice of pizza is the change in satisfaction one gets when eating the third slice instead of stopping with two.
Utility
the total satisfaction received from consuming a good or service
Disutitily
Work
Cost-push inflation occurs when_____?
overall prices increase (inflation) due to increases in the cost of wages and raw materials.
Inferior goods
a good whose demand drops when people’s incomes rise.
Superior goods
a normal good for which the proportional consumption increase exceeds the proportional income increase.
Diminishing marginal utility
as consumption increases, the marginal utility derived from each additional unit declines
Macroeconomics
is the study of economies on the national, regional or global scale.
Microeconomics
studies the behavior of individual households and firms in making decisions on the allocation of limited resources
Marginal utility
is the added satisfaction a consumer gets from having one more unit of a good or service.
