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Economics Class 1 Flashcards

1
Q

What is the definition of economics?

A

How people and nations use limited resources to produce, distribute, and consume goods/services.

Economics is concerned with resource allocation and decision-making processes.

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2
Q

What distinguishes human decision-making from robotic predictability in economics?

A

Individual behavior varies, but group behavior shows patterns suitable for study.

This highlights the complexity of human actions in economic contexts.

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3
Q

What are the two main branches of economics?

A

Microeconomics and Macroeconomics.

These branches focus on different aspects of economic analysis.

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4
Q

What does microeconomics study?

A

Individual decision-making and market interactions.

Focuses on specific markets and resource allocation.

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5
Q

What are the key aspects of microeconomics?

A
  • Demand
  • Supply
  • Pricing

These aspects help understand market dynamics.

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6
Q

What is the origin of the term ‘micro’?

A

‘Micró’ (Greek) means small.

Reflects the focus on individual agents in microeconomics.

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7
Q

What does macroeconomics study?

A

The entire economy and total economic activity.

It encompasses large-scale economic factors.

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8
Q

What are the key aspects of macroeconomics?

A
  • National productivity
  • Economic growth
  • Price levels
  • Inflation
  • Unemployment
  • Income distribution

These aspects provide a broad view of economic performance.

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9
Q

What is the origin of the term ‘macro’?

A

‘Makros’ (Greek) means large.

Indicates the broad scope of macroeconomic analysis.

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10
Q

What perspective does macroeconomics offer?

A

A broad, overall view of economic trends.

Useful for understanding aggregate outcomes in the economy.

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11
Q

How does microeconomics differ from macroeconomics?

A

Micro: Detailed, specific behavior (microscope view). Macroeconomics: Broad, overall trends (telescope view).

This distinction highlights the different levels of analysis in economics.

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12
Q

What is the focus of positive economics?

A

Objective, fact-based analysis

Positive economics aims to describe, explain, and predict economic phenomena using verifiable statements.

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13
Q

What does normative economics involve?

A

Subjective, value-based judgments

Normative economics focuses on making judgments and suggesting policies based on beliefs.

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14
Q

Define scarcity in economics.

A

Limited resources vs. unlimited demand

Scarcity implies that resources are finite while human wants are infinite.

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15
Q

What are tangible items referred to in economics?

A

Goods

Examples of goods include vegetables and vehicles.

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16
Q

What are intangible items in economics called?

A

Services

Examples of services include haircuts and online courses.

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17
Q

Differentiate between wants and needs in economics.

A

Wants: Non-essential items; Needs: Essential items for survival

Examples of wants include iPhones, while needs include food and shelter.

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18
Q

What is the goal of positive economics?

A

Describe, explain, predict using hypotheses and models

Positive economics focuses on factual analysis and prediction.

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19
Q

What does the term ‘resources’ refer to in economics?

A

Factors of production: land, labor, capital, entrepreneurship

Resources are essential for producing goods and services.

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20
Q

What is allocative efficiency?

A

Ratio of useful output to input

Allocative efficiency aims to minimize waste in resource allocation.

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21
Q

Define equity in the context of economics.

A

Fair distribution of income and wealth

Equity differs from equality as it focuses on fairness rather than sameness.

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22
Q

What does sustainability mean in economics?

A

Meeting current needs without harming the future

Sustainability emphasizes the importance of resource conservation.

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23
Q

What is interdependence in economics?

A

Interaction between consumers, firms, governments

Interdependence highlights the economic consequences of interconnectedness.

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24
Q

What is the importance of economic well-being?

A

Prosperity, quality of life, income levels

Economic well-being reflects the overall financial security of individuals and communities.

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25
Fill in the blank: The nature of positive economics is _______.
Objective, fact-based
26
Fill in the blank: The nature of normative economics is _______.
Subjective, value-based
27
True or False: Positive economics includes making value judgments about economic policies.
False ## Footnote Positive economics focuses on objective analysis, while normative economics involves value judgments.
28
What is the implication of scarcity in economic decision-making?
Decision-making between alternatives ## Footnote Scarcity forces individuals and societies to make choices regarding resource allocation.
29
What is the definition of economic intervention?
Government market involvement ## Footnote Economic intervention aims to address market failures such as equity and sustainability.
30
What is the definition of scarcity in economics?
Finite resources vs infinite human wants ## Footnote Scarcity is a central concept in economics, as it necessitates choice and resource allocation.
31
Why is scarcity significant in economics?
It is a central concept; without scarcity, economics would not exist ## Footnote Scarcity drives the need for economic study and decision-making.
32
What distinguishes an economic good from a free good?
Economic goods: have a price, limited, rationed; Free goods: abundant, no cost, unlimited ## Footnote Examples of free goods include air in rural areas.
33
What is opportunity cost?
What is sacrificed to obtain something else ## Footnote Opportunity cost is a crucial concept in understanding economic decision-making.
34
What leads to allocation decisions for goods and services?
Income limitation ## Footnote Individuals must make choices based on their income constraints.
35
What is an example of opportunity cost?
Choosing an empanada over a chicken wrap makes the wrap the opportunity cost ## Footnote Opportunity cost reflects the next best alternative foregone.
36
What is the law of diminishing marginal utility?
As consumption rises, marginal utility decreases ## Footnote This principle explains consumer behavior regarding the value of additional units consumed.
37
What is total utility?
Overall satisfaction from a quantity consumed ## Footnote Total utility helps measure consumer satisfaction.
38
What is marginal utility?
Added satisfaction from one more unit consumed ## Footnote Marginal utility is central to understanding consumer preferences.
39
What happens to marginal utility as more units are consumed?
It decreases ## Footnote This reflects the principle that the first unit consumed typically provides the highest satisfaction.
40
Who originated the concept of marginal utility?
Carl Menger in 1871 ## Footnote Menger's work, 'Principles of Economics,' laid the foundation for modern economic thought.
41
What are common resources?
Limited and can deplete (e.g., forests, rivers) ## Footnote Common resources require careful management to prevent depletion.
42
What type of goods can shift from free to economic?
Goods depending on availability (e.g., land in early America vs. now) ## Footnote The classification of goods can change based on scarcity.
43
What are government-provided goods?
Economic goods provided free due to tax funding (e.g., roads, parks) ## Footnote These goods are funded by public resources and available to all.
44
Fill in the blank: Economic goods require _______.
[scarce resources] ## Footnote Scarcity is a defining characteristic of economic goods.
45
True or False: Free goods have opportunity costs.
False ## Footnote Free goods are abundant and do not require sacrificing alternatives.
46
What is the core issue in economics?
Resources are scarce, wants are infinite, leading to necessary choices. ## Footnote This highlights the fundamental economic problem of scarcity and choice.
47
What are the three key questions in economics?
1. What to produce and in what quantities? 2. How to produce? 3. For whom to produce? ## Footnote These questions guide economic decision-making regarding resource allocation.
48
Define price rationing.
Allocation of scarce resources through prices based on supply and demand. ## Footnote Price rationing helps determine what goods are produced and in what quantities.
49
What is non-price rationing?
Distribution of goods and services based on factors other than price, such as government plans. ## Footnote This method is commonly used in planned economies.
50
What characterizes a pure free market economy?
Ownership is private, decision-making is price-driven through consumer and firm interactions. ## Footnote This system relies on market forces to allocate resources.
51
What are the characteristics of a planned economy?
Ownership is public/government, decision-making is centralized government planning. ## Footnote In this system, the government controls economic activities.
52
What is the outcome of a free market economy?
Decides production, distribution, and income based on market forces. ## Footnote Free market economies rely on supply and demand to dictate economic outcomes.
53
What are the disadvantages of a planned economy?
* Overprovision of harmful goods * Underprovision of merit goods (e.g., healthcare) * Environmental/resource depletion * Inequality, vulnerable groups unsupported * Complex, inefficient resource allocation * No price system, arbitrary decisions * Low motivation, distorted incentives * Loss of personal freedom, potential government corruption. ## Footnote These disadvantages can lead to inefficiencies and social issues.
54
In a free market economy, how are resources owned?
Resources are owned by the private sector. ## Footnote This promotes competition and innovation within the economy.
55
In a planned economy, how are resources owned?
Resources are owned by the public sector. ## Footnote Government ownership aims to control production and distribution.
56
True or False: In a free market economy, decision-making is government-controlled.
False. ## Footnote Decision-making in a free market economy is private and driven by market forces.
57
Fill in the blank: In a planned economy, rationing is based on ______.
[government plans]. ## Footnote This contrasts with price-based rationing in free market systems.
58
What is the primary motivation in a free market economy?
Profit motive. ## Footnote This can lead to the overprovision of harmful goods.
59
What is the core issue in economics?
Resources are scarce, wants are infinite, leading to necessary choices. ## Footnote This highlights the fundamental economic problem of scarcity and choice.
60
What are the three key questions in economics?
1. What to produce and in what quantities? 2. How to produce? 3. For whom to produce? ## Footnote These questions guide economic decision-making regarding resource allocation.
61
Define price rationing.
Allocation of scarce resources through prices based on supply and demand. ## Footnote Price rationing helps determine what goods are produced and in what quantities.
62
What is non-price rationing?
Distribution of goods and services based on factors other than price, such as government plans. ## Footnote This method is commonly used in planned economies.
63
What characterizes a pure free market economy?
Ownership is private, decision-making is price-driven through consumer and firm interactions. ## Footnote This system relies on market forces to allocate resources.
64
What are the characteristics of a planned economy?
Ownership is public/government, decision-making is centralized government planning. ## Footnote In this system, the government controls economic activities.
65
What is the outcome of a free market economy?
Decides production, distribution, and income based on market forces. ## Footnote Free market economies rely on supply and demand to dictate economic outcomes.
66
What are the disadvantages of a planned economy?
* Overprovision of harmful goods * Underprovision of merit goods (e.g., healthcare) * Environmental/resource depletion * Inequality, vulnerable groups unsupported * Complex, inefficient resource allocation * No price system, arbitrary decisions * Low motivation, distorted incentives * Loss of personal freedom, potential government corruption. ## Footnote These disadvantages can lead to inefficiencies and social issues.
67
In a free market economy, how are resources owned?
Resources are owned by the private sector. ## Footnote This promotes competition and innovation within the economy.
68
In a planned economy, how are resources owned?
Resources are owned by the public sector. ## Footnote Government ownership aims to control production and distribution.
69
True or False: In a free market economy, decision-making is government-controlled.
False. ## Footnote Decision-making in a free market economy is private and driven by market forces.
70
Fill in the blank: In a planned economy, rationing is based on ______.
[government plans]. ## Footnote This contrasts with price-based rationing in free market systems.
71
What is the primary motivation in a free market economy?
Profit motive. ## Footnote This can lead to the overprovision of harmful goods.
72
What is the definition of a mixed economy?
Blend of market mechanisms and government planning ## Footnote Mixed economies combine elements of both capitalism and socialism.
73
What are the key features of mixed market economies?
Private and public sectors share roles in ownership/decision-making ## Footnote The balance between private and public roles varies by country.
74
What role does the private sector play in a mixed economy?
Determines production/sales decisions ## Footnote The private sector is responsible for producing goods and services based on market demand.
75
What is the role of the government in a mixed economy?
Manages public services and influences private sector through policies ## Footnote Government interventions include regulations and taxes.
76
In which type of economies is market dominance with limited intervention observed?
USA and UK ## Footnote These countries exemplify market-oriented economies with minimal government interference.
77
Which countries focus on income redistribution within their mixed economies?
Nordic Countries ## Footnote Nordic economies emphasize welfare policies and social equity.
78
What unique approach does Japan take regarding its mixed economy?
Coordination with private sector activities ## Footnote Japan's government often collaborates closely with businesses to foster economic growth.
79
What is resource allocation?
Assignment of resources to uses; involves deciding 'what/how much' and 'how' to produce ## Footnote Resource allocation is fundamental in determining the production of goods and services.
80
What does income distribution determine?
Who receives produced goods and services ## Footnote Income distribution affects economic inequality and access to resources.
81
What is reallocation in the context of economics?
Shifting resources based on new priorities ## Footnote Reallocation can occur due to changes in demand or policy adjustments.
82
What are the types of capital in economics?
* Physical Capital * Natural Capital * Human Capital * Financial Capital * Social Capital ## Footnote Each type of capital plays a distinct role in the economy.
83
What is physical capital?
Man-made resources (machinery, tools) for production ## Footnote Physical capital is essential for increasing productivity in manufacturing.
84
What is natural capital?
Resources essential for life/economy ## Footnote Natural capital includes resources like minerals and forests.
85
What does human capital refer to?
Skills, education, health enhancing productivity ## Footnote Human capital is critical for workforce efficiency and economic growth.
86
What is financial capital?
Investments generating monetary returns ## Footnote Financial capital is necessary for funding businesses and expansion.
87
What is social capital?
Network-based resources facilitating support/access ## Footnote Social capital includes relationships and networks that can enhance economic opportunities.

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