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Microeconomics > Economics Module 1 > Flashcards

Economics Module 1 Flashcards

1
Q

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limited resources means that everyone cannot have all they want, must face choices

A

scarcity

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2
Q

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process of making choices

A

decision making

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3
Q

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choice that is the most desirable

A

best/optimal choice

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4
Q

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relative desires

A

economic wants

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5
Q

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what is actually required in order to survive

A

biological needs

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6
Q

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there are limited resources, each decision has trade offs

A

why choices are made

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7
Q

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system for coordinating society’s productive activities

A

economy

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8
Q

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what kinds of choices the economy requires

A

production, distribution, consumption

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9
Q

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institutional arrangement or methods used in order to make choices for the economy

A

economic system

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10
Q

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allocating different limited quantities

A

rationing

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11
Q

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type of rationing done by determining prices

A

rationing in a market economy

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12
Q

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goods it is difficult to survive without a minimum amount of

A

necessities

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13
Q

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more wants than is possible= prices go up
increased demand= increased prices

A

peak/dynamic/real-time/demand based pricing

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14
Q

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when output and income decline for at least six months

A

recession

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15
Q

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information that consumers use so that they make the right decisions

A

price signals

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16
Q

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individuals make decisions on behalf of households or firms

A

self interest

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17
Q

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choices are made that are best for the society as a whole

A

social interest

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18
Q

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in pursuing your own interests, you often end up supporting society’s interests, reason for market system not being chaos

A

invisible hand

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19
Q

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market fails to achieve the best use of society’s resources, when the pursuit of self interest leaves the rest of society worse off

A

market failure

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20
Q

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individuals on behalf of households and firms own resources and make decisions, decentralized

A

free markets/capitalism/laissez faire

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21
Q

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government owns resources and makes decisions, not a lot of consumer goods, centralized

A

command/centrally planned economy

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22
Q

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no central plan for the economy, no set prices, no set breakdown of resources

A

decentralized

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23
Q

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property in which the gains and losses are solely on you

A

private property

24
Q

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have aggregate wealth increased by the use of resources rather than spreading the wealth

A

goal of capitalism

25
Q

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self interest=social interest

A

best outcome

26
Q

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when assumptions hold

A

theories are valid

27
Q

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studies how people make decisions and how these decisions interact

A

microeconomics

28
Q

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studies the overall ups and downs in the economy

A

macroeconomics

29
Q

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growing ability of the economy to produce goods and services

A

economic growth

30
Q

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economic growth that does not harm the environment

A

sustainable long-run economic growth

31
Q

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decision by an individual of what to do and what not to do

A

individual choice

32
Q

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first principle of individual choice

A

choices are necessary because resources are scarce

33
Q

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anything that can be used to produce something else

A

resource

34
Q

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resources supplied by nature

A

land

35
Q

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effort of workers, measured by hours of people at work

A

labor

36
Q

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any manufactured aid to production

A

physical capital

37
Q

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acquired skills, education, and training of those in the work force

A

human capital

38
Q

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second principle of individual choice

A

the true cost of something is its opportunity cost

39
Q

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what you must give up/sacrifice in order to get something, benefits forgone from not picking the next best alternative

A

opportunity cost

40
Q

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third principle of individual choice

A

“how much” is a decision at the margin

41
Q

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comparing the cost with the benefits of doing something

A

trade-off

42
Q

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decisions about whether to do a bit more or a bit less of an activity

A

marginal decisions

43
Q

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study of marginal decisions

A

marginal analysis

44
Q

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fourth principle of individual choice

A

people usually respond to incentives, exploiting opportunities to make themselves better off

45
Q

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anything that causes a person to change their behavior or decision, basis of all predictions about individual choices and decisions

A

incentive

46
Q

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what an individual item bought is worth

A

price

47
Q

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amount needed to produce a product

A

cost

48
Q

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type of resource that can be produced

A

capital

49
Q

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benefits or doing a little more or less of something

A

marginal benefits

50
Q

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costs of doing a little more or less of something

A

marginal costs

51
Q

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a person increases an activity

A

when MB is greater than or equal to MC

52
Q

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quantity of resources

A

input

53
Q

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knowledge about how to combine inputs, how to combine goods and services

A

technology

54
Q

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prices of inputs

A

cost of production

55
Q

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a person decreases an activity

A

when MB is less than MC

Microeconomics (7 decks)

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