Economics Unit 1 Flashcards
What is Autonomy?
Someone’s desire to make their own decisions
What is Mastery?
Someone’s desire to master a skill
What is Purpose?
Someone’s desire to make a difference
What is Financial Incentive?
When money is used as the reward
What is Social Incentive?
When the reward projects a positive social image or reputation
What is Moral Incentive?
When the reward is the feeling that you did the right thing
What is an Opportunity Cost?
The thing(s) you are missing out on when making a decision
How does opportunity costs relate to ration decision-making?
If your marginal benefit is greater than your opportunity cost, then the decision was rational.
What is Scarcity?
When there will NEVER be enough of a certain resource
What is a Shortage?
When there is temporarily not enough of a resource
What is a Sunk Cost?
Money that you already spent and can’t get back
Why should you try to ignore Sunk costs?
Because they have no financial bearing on future decisions
What is a Production Possibility Curve?
A chart that shows the possible amount that can be produced between two resources
What does Efficiency mean (in PPCs)?
A state where ALL resources are optimally used
What is Inefficiency (In PPCs)?
When NOT all resources are being optimally used
What is Growth (In PPCs)?
An increase in the size of a countries possible production (or economy)
What does it mean if there is a point on the curve of a PPC graph?
Then all resources are being optimally used
What is The Law of Increasing Costs?
To produce an increasing amount of a good, a supplier must give up greater and greater amounts of another good
What is the Product Market (In a circular flow diagram)?
Where the goods and services produced by firms are bought by the household
What is the Factor Market (In circular flow diagrams)?
Where the factors (or resources) for production are bought and sold
What is Land?
All natural resources
