Econ Test 1 Flashcards
(25 cards)
Alfred Marshall’s definition of economics
the study of mankind in the ordinary business of life
Mankiw’s definition of economics
the study of how society manages its scarce resources
resources
whatever you have that helps you get what you want
scarcity
not enough compared to what we want
trade-off choosing
the choice to do one thing and not to another
opportunity cost
what you give up when you choose to do something
economics in this class
the study of decisions made where there is an opportunity cost
theory
system of relations between factors, including interactions and cause/effect links
model
simplified representation of how the world works
hypothesis
conditional prediction
production possibilities
curve or schedule that shows all combinations of goods that can be produced using all available resources and technology
feasible
its possible and can be done
efficient
most output possible
technology
all the known ways to combine resources to produce goods
positive economics
descriptive economics, tells about how the world works and what is
normative economics
welfare economics, tells about the changes that should be made and what ought to be
economic system
structure of laws, customs, and government bodies that generates our answers
price system
market sets the price and people respond to them
quantity demanded
the amount people are willing to buy at one particular price
demand
the curve or schedule that shows quantities people are willing to buy at various prices
normal good
as income increases the demand increases
inferior good
when income increases the demand decreases.
quantity supplied
the amount people are willing to sell at one particular price
supply
the curve or schedule that shows the quantities people are willing to sell at various prices
