Economics Flashcards
What is scarcity?
Having unlimited needs and wants with limited resources
What is economics?
Study of how people try to satisfy unlimited needs and wants with limited resources
What is the largest economic problem?
Scarcity
What is purposeful behavior?
The idea that people make rational economic decisions
What is a cost benefit analysis?
If something will not “pay for itself”, don’t buy it
What is analyzing the cost benefit of something called? (As an idiom)
Thinking at the margin
What means “All other things being equal”?
Ceterus paribus
What does ceterus paribus mean?
Taking away factors that affect cost
What is another word for oppurtunity cost?
Trade off
What is an oppurtunity cost?
The value of an oppurtunity not taken
What is a production possibility curve?
An unproportional inverse relationship of 2 goods
What is a good used to create things that produce other things?
Capital good
What is a consumer good?
A good created using capital resources
What are assumptions about the production possibility curve
There are only two goods being compared,
everyone is employed,
resources are fixed,
technology is constant
What are’s three coordination tasks of capital and consumer goods
What goods to produce, how many’s to produce, how to distribute the goods
What system’s government dictates the three coordination tasks
Command
What system does the market determined three tasks instead of the government
Market system
Who first described the systems
Adam Smith
Who brought about the idea of an invisible hand in the economy
Adam Smith
What is it called that that market will guide it self
Invisible hand
What is the principle of increasing cost also known as
The law of diminishing return
What is the principle of increasing cost
Costs will rise if you add more units of production
What economy do we have
mixed economy
What is an idiom for maximum efficiency
Producing at the frontier
