ECON REVIEW Flashcards
Ancient Greek word of Economics
Oikonomia
The Father of Economics
Adam Smith
The process that transforms scarce resources into useful goods and services
Production
These are products or things that have been produced in the past but are now being used directly or indirectly to satisfy human wants.
Resources
It is the condition in which national output is growing steadily with low inflation and full employment of resources.
Stability
It refers to the behavior of individuals, companies, and industries.
Microeconomics
It happens when nations exchange goods with each other and they expect to gain from exchange
Trade
T/F
Gains from trade requires specialization according to absolute advantage
False
It is the ability of a person to perform an activity or produce a good or service at a lower opportunity cost
Comparative Advantage
It means the ability of a party to produce a particular good at a lower absolute cost than another.
Absolute Advantage
It is a model showing the basic economic relationships within a market economy
Circular Flow of Economic
The primary producing units in an economy
Firm
T/F
Gains from trade requires specialization according to comparative advantage, not according to absolute advantage
True
T/F
The exchange of resources can likewise increase their skill level
True
The consuming units in an economy
Household
T/F
Everyone always has a comparative advantage at something, but may not have an absolute advantage
True
Economics is the study of
__________________
that nature and past generations have provided
how individuals, firms and societies choose to use the scarce resources,
Three Basic Questions asked in economics
- What gets produced?
- How is it produced?
- Who gets what is produced?
If the problem is scarcity, what is the solution?
Production
Two Markets in Microeconomics
Output Market & Input Market
Two Kinds of Output Markets
Goods & Services
Four Kinds of Input/Input Markets
Land, Labor, Capital and Entrepreneurial Mind
Concept of Opportunity Cost
The best alternative that we give up, or
forgo, when we make a choice or decision.
Income paid for the use of capital
Interest
The input/factor market in which households supply work for wages to firms that demand labor.
Labor Market
The input/factor market in which households supply their savings, for interest or for claims to future profits, to firms that demand funds to buy capital goods.
Capital Market
What kind of slope does a demand curve have?
Negative slope
Goods for which demand tends to fall when income rises.
Income Goods
The process by which the market system allocates goods and services to consumers when quantity demanded exceeds quantity supplied.
Price Rationing
The total loss of producer and consumer surplus from
underproduction or overproduction.
Deadweight loss
