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G10 Economics > Economics And The Economic Problem, Opportunity Cost And Marginal Analysis, Production Possibilities Frontier > Flashcards

Economics And The Economic Problem, Opportunity Cost And Marginal Analysis, Production Possibilities Frontier Flashcards

1
Q

Economics

A
  • Study of how society allocates scarce resources based on unlimited wants of its people
  • We want unlimitedly in a world of limited resources, so economics helps us determine which resources are used for our wants
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2
Q

2 kinds of economics

A

Macroeconomics and microeconomics

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3
Q

Macroeconomics

A

study of how the economy functions as a whole at a national level

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4
Q

Microeconomics

A

study of individual households, groups, firms, markets

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5
Q

Macroeconomics deals with

A
  • total output & income
  • total employment
  • inflation
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6
Q

Needs

A

what we need to survive; includes:
- food
- clothing
- shelter
- healthcare
- basic education

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7
Q

Wants

A

desires satisfied by consuming goods or services

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8
Q

Resources

A

anything used to produce goods and services

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9
Q

Examples of resources include:

A

LLCE:
Land
Labor
Capital
Entrepreneurship

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10
Q

Land

A

natural resources as gifts of nature

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11
Q

Labor

A

human resources and effort that goes into goods and services

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12
Q

Capital

A

capital resources that help produce other goods and services

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13
Q

Entrepreneurship

A

ability to take risks and make new products/new uses of products

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14
Q

Scarcity

A

occurs when there aren’t enough resources to meet demand; it is when society makes choices, as there aren’t enough resources to meet our wants

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15
Q

Examples of scarce resources

A

gold, oil, natural gas, TIME

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16
Q

Incentive

A

Any reward or benefit that encourages someone to do something; motivation

16
Q

Margin

A

concept used to describe the current level of consumption/production of a good/service

17
Q

Opportunity cost

A

Second-best option you’re passing up on; (You were my everything, I was your second best)

17
Q

When shopping, you realize you want an H&M shirt and a Bershka shirt. However, you’re not rich enough to buy both. If you choose the Bershka shirt, what is the opportunity cost?

A

H&M shirt; because losing the opportunity to get Bershka shirt would be the opportunity cost of H&M shirt

18
Q

Marginal Analysis

A

decision-making tool for comparing the marginal (additional) benefits of a course of action to the marginal (additional) costs

19
Q

If the marginal benefit is ___ than the marginal cost, it is worth doing

A

GREATER

20
Q

Marginal Cost

A

Increase in a producer’s total cost when it increases its output by one unit

21
Q

Marginal Benefit

A

Additional gain from consuming/producing one more unit of a good or service

22
Q

TINSTAAFL

A

“There is no such thing as a free lunch”

23
Q

What does the TINSTAAFL principle mean?

A

Even if you didn’t pay for something, someone did, and there are costs as a result of that. (Nothing in life is free….)

24
Q

Our best decisions are made _____

A

at the margin

25
Q

____ helps us decide how we want to spend our resources

A

Marginal Analysis

26
Q

If the marginal cost is greater than the marginal benefit, _____

A

it isn’t worth spending the resource

27
Q

Production Possibilities Frontier/Curve

A

shows the different combinations of 2 goods/services that can be provided in a given time period with a fixed amount of resources

28
Q

The PPF is a table that shows the

A

full employment capacity of an economy in the form of possible combinations of 2 goods that could be produced within a given amount of productive resources and level of technology

29
Q

On the PPF, what do the points on the curve/line mean?

A

These points mean the economy is using its resources at the most efficient level

30
Q

On the PPF, what do the points inside the curve mean?

A

The economy is underutilizing resources/ not using resources efficiently

31
Q

On the PPF, what do the points outside the curve mean?

A

impossible!!! Reaching this point is impossible because we can never have enough resources to reach that point

32
Q

What does it mean for the economy if it moves towards the “impossible” point?

A

It shows there is economic growth, due to a change in resources and/or advances in technology

G10 Economics (2 decks)

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