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ECON 101 > ECON 101 - chp. 1 > Flashcards

ECON 101 - chp. 1 Flashcards

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1
Q

Define economics

A

social science that studies the choices that individuals, businesses, governments, and entire societies make as they cope with scarcity and the incentives that influence and reconcile those choices.

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2
Q

define scarcity

A

Our inability to get eveyrthing we want

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3
Q

why and how do we make choices?

A

we make choices due to scarcity.

the choices we make depend on the incentives we face

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4
Q

Define incentive

A

a reward that encourages an action or penalty that discourages an action

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5
Q

provide a positive incentive

A

scholarship for getting high grades

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6
Q

provide a negative incentive

A

parking ticket

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7
Q

define microeconomics

A

study of choices that individuals and businesses make, the way those choices interact in markets, and the influence of governments.

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8
Q

define macroeconomics

A

study of the performance of the national and global economics

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9
Q

what are the 2 questions that summarize the scope of economics

A
  1. how do choices end up determining what, how, and for whom goods + services get produced?
  2. do choices made in the pursuit of self-interest also promote social interest?
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10
Q

define goods + services

A

objects that people value and produce to satisfy human wants

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11
Q

define factors of production

A

resources we use to produce goods + services

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12
Q

describe what we produce

A

what we produce varies across countries and changes over time

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13
Q

describe how we produce

A

how we produce is based on the technologies and resources we use

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14
Q

what are the factors of production

A
  1. land
  2. labour
  3. capital
  4. entrepreneurship
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15
Q

what does the quality of labour depend on?

A

human capital (knowledge + skills)

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16
Q

define land

A

the “gifts of nature” that we use to produce goods + services

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17
Q

how to obtain human capital

A

education, work experience, on-the-job training

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18
Q

define capital

A

tools, instruments, machines, building and other constructions that businesses use to produce goods + services

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19
Q

Define entrepreneurship

A

the human resources that organizes land, labour, and capital

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20
Q

for whom does the goods and services get produced for?

A

dependent on the incomes that people aern

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21
Q

what are the revenue for each factor of production

A
  1. land = rent
  2. labour = wages
  3. capital = interest
  4. entrepreneurship = profit
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22
Q

which factor of production revenue earns the most? what percentage?

A

wages from labour earns the most. about 70%

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23
Q

define self-interest

A

choice that you think are best for you

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24
Q

define social interest

A

choices that are best for society as a whole

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25
Q

what are the 6 key ideas that define the economic way of thinking

A
  1. a choice is a tradeoff
  2. people make rational choices by comparing benefits + costs
  3. benefit is what you gain from something
  4. cost is what you must give up to get something
  5. most choices are “how-much” choices made at the margin
  6. choices respond to incentives
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26
Q

define a rational chocie

A

a chocie that compares the costs and benefits and achieves the greatest benefit over cost for the person making the choice

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27
Q

how do you determine the rationality of a choice?

A

on the wants of the person making the choice

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28
Q

define benefit in the econ context

A

the gain/pleasure that it brings and is determined by preferences

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29
Q

define preferences

A

what a perons likes and dislikes and the intensity of those feelings

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30
Q

define opportunity cost of something

A

is the highest-valued alternative that must be given up to get it.

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31
Q

what are the 2 components of opportunity cost

A
  1. time
  2. purchasing power (money)
32
Q

define marginal benefit

A

benefit from pursuing an incremental increase in an actiivty

33
Q

define marginal cost

A

oppourtunity cost of pursuing an incremental increase in an activity

34
Q

What happens when there’s a change in marginal benefit/cost

A

there’s a change in the incentives we face and leads us to change our choice

35
Q

what happens when marginal benefit is greater than marginal cost for an activity

A

our rational choice is to do more on the activity

36
Q

define positive statements

A

it’s about “what is”
it must be right or wrong
can be tested by checking it against facts

36
Q

define normative statements

A

is about :what ought to be”
it expresses an opinion and cannot be tested

37
Q

define an economic model

A

a description of some aspect of the economic world that includes only those features that are needed for the purpose at hand

38
Q

define ceteris paribus

A

all other things being equal

39
Q

what types of experiments do economists use to test economic models?

A
  1. natural experiments
  2. statistical investigations
  3. economic experiments
40
Q

define natural experiements

A

situations in the ordinary course of economic life in which the one factor of interest is different and other things are ceteris paribus. - takes too long

41
Q

define statistical investigations

A

to find correlations -

42
Q

define economic experiments

A

putting people in decision-making situations and varying the influence of 1 factor at a time to discover how they respond - costly

43
Q

define a scatter diagram

A

plots the values of 1 variable against the value of another variable for a number of different values of each variable

44
Q

what’s the importance of a scatter diagram

A

reveals whether a relationship exists between 2 variable

45
Q

what are the 4 cases to look in for graphs

A
  1. variables moving in the same direction
  2. variable move in opposite directions
  3. variables have a maximum or minimum
  4. variables are unrelated
46
Q

define a direct relationship in regards to 2 variables

A

2 variables that move in the same direction

47
Q

define a linear relationship

A

a relationship shown by a straight line for variables that move in the same direction

48
Q

define a positive relationship

A

a line that slopes upward - variables that move in the same direction

49
Q

define an inverse relationship in the context of variables

A

a relationship between 2 variables that move in opposite directions.

50
Q

define negative relationship

A

a line that slopes downwards

51
Q

how to show graphs of variables that are unrelated

A

a y constant or an x constant

52
Q

define slope of a relationship

A

the change in the value of the variable measured on the y-axis divided by the change in value of the variable measured on the x-axis

53
Q

how to calculate the slope of a straight line

A

rise over run

54
Q

how to calculate the slope of a curve line on a point

A

slope is equal to the slope of a straight line that is the tangest to that point

55
Q

how to calculate the slope across an arc

A

the average slope of a curved lined across an arc is equal to the slops of a straight line that joins the endpoints of the arc.

56
Q

How to graph a relationship among more than 2 varibales

A

we can plot the relationship between 2 variables by holding other variables constant (ceteris paribus)

57
Q

How is what society can get limited?

A

limited by the productive resources available

58
Q

define goods

A

physical/tangible objects

59
Q

define services

A

tasks performed for people - intangible objects

60
Q

define labour

A

the work time and work effort hat people devote to producing good + services - includes physical + mental efforts of all the people

61
Q

define financial capital

A

money stocks, bonds

62
Q

importance of financial capital

A

enabling businesses to borrow funds that they use to buy physicals capital

63
Q

can self-interest promote social interest

A

yes, it depends on the context and what your self-interest is

64
Q

define efficient in the context of economics

A

to describe a situation that can’t be improved upon

65
Q

define globalization in economics

A

expansion of international trade, borrowing and lending, and investment

66
Q

define market capitalism

A

economic system in which individuals own land + capital and are free to buy and sell land, capita, and goods and services in markets. market for goods and services which determine what, how, and for whom goods and services are produced. there’s no supreme planner guiding the use of scare resources and the outcome is unintended and unforeseeable.

67
Q

define a centrally planned socialism

A

economic system where the government owns all the land, capital, directs works to jobs and decides what, how and for whom to produce.

68
Q

define a mixed economy

A

market capitalism with government regulation

69
Q

define a tradeoff in the context of economics

A

an exchange - giving up 1 thing to get something else

70
Q

how do economists measure benefit?

A

the most that a person is willing to give up to get something

71
Q

what do economists see incentives the key to?

A

key to reconciling self-interest and social interest

72
Q

define an economic model

A

a description of some aspect of the economic world that includes only those features that are needed for the purpose at hand

73
Q

when are most choices made

A

at the margin by comparing marginal benefit and marginal cost

74
Q

how can economics be use as a toolkit

A

used to provide advice on government, business and personal economic decisions.

ECON 101 (14 decks)

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