Econ Test Flashcards
What is the technical definition of Economics?
The study of how society chooses to allocate its scarce resources to the production of goods and services in order to satisfy unlimited wants.
Economics simplified definition
Study of choices
What is the most basic problem and fundamental principle of Economics?
Human wants are forever greater than available supply of goods, time, and resources; aka scarcity
What is scarcity, and how does it influence decision-making by societies and individuals?
Scarcity is the conditions that human wants unlimited and resources are limited. It influences who gets more of certain things and how much economies make.
What are the three economic questions?
What to produce?
How to produce it?
For whom to produce?
What is an economist?
an expert who studies the relationship between a society’s resources and its production or output
What is the difference between Microeconomic and Macroeconomics?
Microeconomics is the study of individual choices, household choices, firm choices, etc. Macroeconomics is the study of the economy as a whole.
What is the difference between consumers and producers?
Consumers purchase goods/services and producers decide what they are going to sell and what price it is.
What is the difference between a good and a service
Goods are things you can buy and keep, are tangible
and service is things that people provide that can’t be owned
3 examples of good
-Coffee
-Vinyls
-Cheesecake
3 examples of services
-Plumber
-The person making the coffee
-A cashier bagging the clothes you bought
What does allocation means in terms of scarcity?
Ways societies and people answer the economic questions and allocate resources.
8 allocations strategies
1.) First come first serve: Tickets to a concert
2.)Majority Rule: Vote on who gets the pumpkin pie
3.)Need: At the food banks, the people that don’t have food get the food from the food bank
4.)Planner decides: The teacher decides who gets the last cupcake.
5.)Person who wins the arm wrestle gets. 20 dollars
6.) Share: Everyone gets a slice of pizz
7.) Lottery: A person wins the lottery and gets money
8.)Market Mechanism: A company spends the most money buying all the supply of milk.
What are factors of production? Which are needed
Things that are used/needed to help produce (make) products (goods/services)
What are the four factors of production?
Capital
Entrepreneurship
Labor
Land
What is the difference between cost and benefit?
A cost is a negative consequence or thing that will not make you want to do the action and a benefit is a positive consequence that will make you want to do the action.
Rational choice theory
Humans are rational actors and they will make the “rational” decision. They will evaluate the positive and the negative effects of their actions and make decisions based on their self interest