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CSE > Economics Class 1 > Flashcards

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
Q

Fill in the blank: The nature of positive economics is _______.

A

Objective, fact-based

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26
Q

Fill in the blank: The nature of normative economics is _______.

A

Subjective, value-based

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27
Q

True or False: Positive economics includes making value judgments about economic policies.

A

False

Positive economics focuses on objective analysis, while normative economics involves value judgments.

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28
Q

What is the implication of scarcity in economic decision-making?

A

Decision-making between alternatives

Scarcity forces individuals and societies to make choices regarding resource allocation.

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29
Q

What is the definition of economic intervention?

A

Government market involvement

Economic intervention aims to address market failures such as equity and sustainability.

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30
Q

What is the definition of scarcity in economics?

A

Finite resources vs infinite human wants

Scarcity is a central concept in economics, as it necessitates choice and resource allocation.

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31
Q

Why is scarcity significant in economics?

A

It is a central concept; without scarcity, economics would not exist

Scarcity drives the need for economic study and decision-making.

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32
Q

What distinguishes an economic good from a free good?

A

Economic goods: have a price, limited, rationed; Free goods: abundant, no cost, unlimited

Examples of free goods include air in rural areas.

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33
Q

What is opportunity cost?

A

What is sacrificed to obtain something else

Opportunity cost is a crucial concept in understanding economic decision-making.

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34
Q

What leads to allocation decisions for goods and services?

A

Income limitation

Individuals must make choices based on their income constraints.

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35
Q

What is an example of opportunity cost?

A

Choosing an empanada over a chicken wrap makes the wrap the opportunity cost

Opportunity cost reflects the next best alternative foregone.

36
Q

What is the law of diminishing marginal utility?

A

As consumption rises, marginal utility decreases

This principle explains consumer behavior regarding the value of additional units consumed.

37
Q

What is total utility?

A

Overall satisfaction from a quantity consumed

Total utility helps measure consumer satisfaction.

38
Q

What is marginal utility?

A

Added satisfaction from one more unit consumed

Marginal utility is central to understanding consumer preferences.

39
Q

What happens to marginal utility as more units are consumed?

A

It decreases

This reflects the principle that the first unit consumed typically provides the highest satisfaction.

40
Q

Who originated the concept of marginal utility?

A

Carl Menger in 1871

Menger’s work, ‘Principles of Economics,’ laid the foundation for modern economic thought.

41
Q

What are common resources?

A

Limited and can deplete (e.g., forests, rivers)

Common resources require careful management to prevent depletion.

42
Q

What type of goods can shift from free to economic?

A

Goods depending on availability (e.g., land in early America vs. now)

The classification of goods can change based on scarcity.

43
Q

What are government-provided goods?

A

Economic goods provided free due to tax funding (e.g., roads, parks)

These goods are funded by public resources and available to all.

44
Q

Fill in the blank: Economic goods require _______.

A

[scarce resources]

Scarcity is a defining characteristic of economic goods.

45
Q

True or False: Free goods have opportunity costs.

A

False

Free goods are abundant and do not require sacrificing alternatives.

46
Q

What is the core issue in economics?

A

Resources are scarce, wants are infinite, leading to necessary choices.

This highlights the fundamental economic problem of scarcity and choice.

47
Q

What are the three key questions in economics?

A
  1. What to produce and in what quantities?
  2. How to produce?
  3. For whom to produce?

These questions guide economic decision-making regarding resource allocation.

48
Q

Define price rationing.

A

Allocation of scarce resources through prices based on supply and demand.

Price rationing helps determine what goods are produced and in what quantities.

49
Q

What is non-price rationing?

A

Distribution of goods and services based on factors other than price, such as government plans.

This method is commonly used in planned economies.

50
Q

What characterizes a pure free market economy?

A

Ownership is private, decision-making is price-driven through consumer and firm interactions.

This system relies on market forces to allocate resources.

51
Q

What are the characteristics of a planned economy?

A

Ownership is public/government, decision-making is centralized government planning.

In this system, the government controls economic activities.

52
Q

What is the outcome of a free market economy?

A

Decides production, distribution, and income based on market forces.

Free market economies rely on supply and demand to dictate economic outcomes.

53
Q

What are the disadvantages of a planned economy?

A
  • 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.

These disadvantages can lead to inefficiencies and social issues.

54
Q

In a free market economy, how are resources owned?

A

Resources are owned by the private sector.

This promotes competition and innovation within the economy.

55
Q

In a planned economy, how are resources owned?

A

Resources are owned by the public sector.

Government ownership aims to control production and distribution.

56
Q

True or False: In a free market economy, decision-making is government-controlled.

A

False.

Decision-making in a free market economy is private and driven by market forces.

57
Q

Fill in the blank: In a planned economy, rationing is based on ______.

A

[government plans].

This contrasts with price-based rationing in free market systems.

58
Q

What is the primary motivation in a free market economy?

A

Profit motive.

This can lead to the overprovision of harmful goods.

59
Q

What is the core issue in economics?

A

Resources are scarce, wants are infinite, leading to necessary choices.

This highlights the fundamental economic problem of scarcity and choice.

60
Q

What are the three key questions in economics?

A
  1. What to produce and in what quantities?
  2. How to produce?
  3. For whom to produce?

These questions guide economic decision-making regarding resource allocation.

61
Q

Define price rationing.

A

Allocation of scarce resources through prices based on supply and demand.

Price rationing helps determine what goods are produced and in what quantities.

62
Q

What is non-price rationing?

A

Distribution of goods and services based on factors other than price, such as government plans.

This method is commonly used in planned economies.

63
Q

What characterizes a pure free market economy?

A

Ownership is private, decision-making is price-driven through consumer and firm interactions.

This system relies on market forces to allocate resources.

64
Q

What are the characteristics of a planned economy?

A

Ownership is public/government, decision-making is centralized government planning.

In this system, the government controls economic activities.

65
Q

What is the outcome of a free market economy?

A

Decides production, distribution, and income based on market forces.

Free market economies rely on supply and demand to dictate economic outcomes.

66
Q

What are the disadvantages of a planned economy?

A
  • 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.

These disadvantages can lead to inefficiencies and social issues.

67
Q

In a free market economy, how are resources owned?

A

Resources are owned by the private sector.

This promotes competition and innovation within the economy.

68
Q

In a planned economy, how are resources owned?

A

Resources are owned by the public sector.

Government ownership aims to control production and distribution.

69
Q

True or False: In a free market economy, decision-making is government-controlled.

A

False.

Decision-making in a free market economy is private and driven by market forces.

70
Q

Fill in the blank: In a planned economy, rationing is based on ______.

A

[government plans].

This contrasts with price-based rationing in free market systems.

71
Q

What is the primary motivation in a free market economy?

A

Profit motive.

This can lead to the overprovision of harmful goods.

72
Q

What is the definition of a mixed economy?

A

Blend of market mechanisms and government planning

Mixed economies combine elements of both capitalism and socialism.

73
Q

What are the key features of mixed market economies?

A

Private and public sectors share roles in ownership/decision-making

The balance between private and public roles varies by country.

74
Q

What role does the private sector play in a mixed economy?

A

Determines production/sales decisions

The private sector is responsible for producing goods and services based on market demand.

75
Q

What is the role of the government in a mixed economy?

A

Manages public services and influences private sector through policies

Government interventions include regulations and taxes.

76
Q

In which type of economies is market dominance with limited intervention observed?

A

USA and UK

These countries exemplify market-oriented economies with minimal government interference.

77
Q

Which countries focus on income redistribution within their mixed economies?

A

Nordic Countries

Nordic economies emphasize welfare policies and social equity.

78
Q

What unique approach does Japan take regarding its mixed economy?

A

Coordination with private sector activities

Japan’s government often collaborates closely with businesses to foster economic growth.

79
Q

What is resource allocation?

A

Assignment of resources to uses; involves deciding ‘what/how much’ and ‘how’ to produce

Resource allocation is fundamental in determining the production of goods and services.

80
Q

What does income distribution determine?

A

Who receives produced goods and services

Income distribution affects economic inequality and access to resources.

81
Q

What is reallocation in the context of economics?

A

Shifting resources based on new priorities

Reallocation can occur due to changes in demand or policy adjustments.

82
Q

What are the types of capital in economics?

A
  • Physical Capital
  • Natural Capital
  • Human Capital
  • Financial Capital
  • Social Capital

Each type of capital plays a distinct role in the economy.

83
Q

What is physical capital?

A

Man-made resources (machinery, tools) for production

Physical capital is essential for increasing productivity in manufacturing.

84
Q

What is natural capital?

A

Resources essential for life/economy

Natural capital includes resources like minerals and forests.

85
Q

What does human capital refer to?

A

Skills, education, health enhancing productivity

Human capital is critical for workforce efficiency and economic growth.

86
Q

What is financial capital?

A

Investments generating monetary returns

Financial capital is necessary for funding businesses and expansion.

87
Q

What is social capital?

A

Network-based resources facilitating support/access

Social capital includes relationships and networks that can enhance economic opportunities.

CSE (3 decks)

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