Episode 1 Flashcards
(42 cards)
What is a good definition of economics?
The study of scarcity and choices
What is opportunity cost?
The loss of opportunity that is associated with making a particular choice
What is the idea of scarcity in economics?
That people have limited resources, but unlimited wants.
What is the implication of scarcity?
That you must make a choice.
What the difficulty about incentives
It’s hard to find the right one that doesn’t have undesirable effects (e.g. rats tails)
What is macroecenomics?
The study of production, employment, prices and olicies on a nationwide scale?
What are some examples of questions asked in macroeconomics?
Will employment rise if there’s an increase in taxes?
Will an increase in the money supply boost output, or just increase inflation?
Will a slump in U.S. economy cause European economy to slow down?
What is microeconomics?
The study of how consumers, workers, and firms interact to generate outcomes in specific markets.
What are some of the questions that microeconomics might ask?
How many workers should we hire to maximise profit?
If your main competitor releases their product in may, when is the best time to release your product?
What is a ‘Production Possibilities Frontier’
It’s a graph showing the trade-off between producing two goods given a limited amount of resources.
In economics, what is a ‘comparative advantage’
When you have a lower opportunity cost for something compared with another party.
What’s the deal with specialization and trade?
Most economists agree that specialisation and trade made the world better off because overall, more can be produced and more needs met.
Economically speaking, what is the judgement of homesteading?
That it is inefficient.
What are the three main characteristics to each type of economic system
What is produced
How it is produced
Who gets the produces
What is a planned economy?
The government controls the facts of production
What is a command economy?
An economy that is completely controlled by the government
What is free market economy?
Where individual control the production and the government isn’t much informed.
What is ‘the invisible hand’ of the free market?
The idea that individuals and businesses meet society’s need when they seek their own interest.
Why is there still a need for the government?
To regulate production to take care of things that consumers might not think of. E.g. welfare of the employees, long term environmental effects.
What is the circular flow model of a mixed economy/
A circular flow from the product market to the resource market, with government exerting control.
What is GDP?
GDP is the value of all final goods and services produced within a country’s border in a specific period of time, usually a year.
What kinds of things aren’t included in GDP?
Basically all things when ownership changes within a country, but nothing new is made (e.g. buying a second hand car, one company buying another)
What’s the problem of measuring GDP in dollars?
It doesn’t take into account inflation and different currency values in different countries.
What is nominal GDP
GDP not adjusted for inflation
