Economics chapter 1 Flashcards
The study of specific markets, decision making by individuals households, firms in the economy.
Microeconomics
What is the study of how individuals make choices to satisfy wants.
Economics
The study of the economy as a whole.The study of nationwide phenomena such as inflation and unemployment.
Macroeconomics
What are the three basic economic questions to ask?
What and how much will be produced.
How items will be produced.
For whom will items be produced.
What are the two economic systems?
Centralized command and control.
Price system.
In economics we assume people do not intentionally make decisions that will leave them worse off.
Rationality assumption
???? Economics is the value free and relates to statements that can be refuted, such as “If A, then B.”
Positive
?????? Economics involves people’s values, opinions or judgements and typically uses the word “should” or ought to be rather than what is
Normative
Behavioral economic approach utilizes the ————Hypothesis that people are not quite rational, because they cannot study every possible alternative but instead use simple rules of thumb to decide among choices.
Bounded rationality
A ——- or ——– uses assumptions and is by nature a simplification of the real world. The usefulness of a ——- can be evaluated by bringing empirical evidences to bear on its predictions.
Model…. Theory …..model
Most models use the ———- assumption that all other things are held constant, or equal.
ceteris paribus
——– economics emphasizes psychological constraints and complexities that potentially interfere with rational decision making.
Behavioral
The rewards that we receive when we chose to engage n particular activities
Incentives
Statements or ideas about how things should be
Theory
Resources or factors of production that we use that society wants are:
Labor- human resources usually hrs worked for production
Capital- amt of physical capital plants, machines, equip used in production
Human capital- level of education and training of the labor input
Technology- society’s combined level of knowledge
