intro to economics Flashcards
What does ‘eco’ in economics derive from?
‘Oikos’ meaning an extended family unit that consists of the house, members of the family, slaves, farmland, and all property.
What does ‘nomy’ in economics refer to?
‘Nomos’ meaning management, law, or principle.
What is the original form of economics?
The management of household.
How does Adam Smith define economics?
A science that enquires into the nature and causes of wealth.
How does John Stuart Mill define economics?
A science of production and distribution of wealth.
What is economics as a social science?
The study of social behavior guiding in the allocation of scarce resources to meet the unlimited needs and desires of individuals in a society.
What are needs in economics?
Essential goods and services required for human survival, such as nutritional food, clean water, shelter, protection, clothing, healthcare, and education.
What are wants in economics?
Goods and services that are not necessary for survival but are desired by humans.
What is scarcity in economics?
Inability to satisfy all wants due to insufficient factors of production.
What are the factors of production?
- Land
- Labor
- Capital
- Enterprise
What leads to the economic problem of choice?
Limited resources versus unlimited wants.
What does opportunity cost refer to?
The cost of the next best alternative that is forgone when making a choice.
What is an incentive in economics?
A reward that encourages or a penalty that discourages an action.
What is specialization?
When people and businesses concentrate on what they are best at.
What are three common reasons for specialization?
- Specialized machinery and technology are widely available
- Increasing competition requires businesses to keep costs low
- Higher standards can result from specialization
What is division of labor?
Workers are trained in one task and specialized in that task.
What is the advantages of labor?
- Workers are trained in one task and specialized in the task – this increase efficiency and output
- Less time is wasted moving from one workbench to another
What is a disadvantage of division of labor?
- Workers can become bored doing just one job and efficiency might fall
- If one worker is absent and no one else can do the job, production may be stopped
Why do students need to study economics?
- To understand the world better
- To gain self-confidence
- To achieve social change
- To help prepare for other careers
- To become an economist
What are the three basic economic questions?
- What to produce?
- How to produce it?
- For whom to produce it?
What is the study of microeconomics?
The study of choices that individuals and businesses make (the way these choices interact in the markets and the influence of the government)
What is the study of macroecenomics?
The performance of the national economy and the global economy.
What are the three main agents of economics?
- Individuals or households
- Firms
- The government
What are goods in economics?
Physical objects that can be produced, bought, and sold.
What are services in economics?
Non-physical items that can be provided by firms and paid for by customers.
Give examples of economic goods.
- Oil
- Wheat
- Cotton
- Car
What are economic goods?
Goods that are limited in supply and require human effort to produce.
What are free goods?
Goods that are unlimited in supply with no opportunity cost in production or
Give examples of free goods.
- Air
- Sea
- Rain
- Water
- Sunlight
