Introduction to economics Flashcards
What was Adam Smith best known for?
Smith is most famous for his 1776 book, “The Wealth of Nations.” Smith’s writings were studied by 20th-century philosophers, writers, and economists. Smith’s ideas–the importance of free markets, assembly-line production methods, and gross domestic product (GDP)–formed the basis for theories of classical economics.
What was the main idea of The Wealth of Nations?
The central thesis of Smith’s The Wealth of Nations is that our individual need to fulfill self-interest results in societal benefit. He called the force behind this fulfillment the invisible hand.
What did Adam Smith say created The Wealth of Nations?
Smith argued that the free-market system along with free trade would produce true national wealth, benefiting all social classes, not just the privileged few.
What is the difference between microeconomic and macroeconomics?
What is the example of Microeconomics and Macroeconomics? Unemployment, interest rates, inflation, GDP, all fall into Macroeconomics. Consumer equilibrium, individual income and savings are examples of microeconomics.
What are 5 examples of scarce resources?
You are probably used to thinking of natural resources such as titanium, oil, coal, gold, and diamonds as scarce. In fact, they are sometimes called “scarce resources” just to re-emphasize their limited availability.
What is aggregate economy?
The level of RGDP is determined by current levels of aggregate demand (AD) and aggregate supply (AS). Since spending levels are more easily changed than production levels most macroeconomic policy focuses on aggregate demand.
Does economics involve math?
Math and statistics are used in economics, but at the undergraduate degree level, the math and statistics are certainly not overwhelming. Economics majors are usually required to take one statistics course and one math course (usually an introductory calculus course).
What is Alfred A. Knopf. quote?
“An economist is a man who states the obvious in terms of the incomprehensible.” - Alfred A. Knopf.
What is scarcity?
Scarcity is one of the key concepts of economics. It means that the demand for a good or service is greater than the availability of the good or service. Therefore, scarcity can limit the choices available to the consumers who ultimately make up the economy.
What is a free resource?
A resource that can be used to produce consumer-satisfying goods and services without imposing an opportunity cost on society by preventing the production or consumption of other consumer-satisfying goods or services.
What are the ways of allocating scarce resources?
As scarce resources have a value greater than zero (a ‘positive price tag’), they can be allocated depending on who pays the most for them. One way of obtaining more scarce resources is buying more of them using another scarce resource – money – which means it involves a trade-off of value.
Why is caviar rare?
While caviar is undeniably a premium food, pricing is not really related to quality. Expensive caviar carries that price tag due to fish rarity, high demand, and labor-intensive productio
What are the four factors of production?
The factors of production are the inputs used to produce a good or service in order to produce income. Economists define four factors of production:
Land, labor, capital and entrepreneurship. These can be considered the building blocks of an economy.
Difference between normative vs positive statement?
A positive statement is one that can establish hypotheses that can be empirically tested. In contrast, a normative statement is instead based on opinion or subjective values.
What is the difference between a positive and a normative statement?
What is the difference between normative and positive statements in the context of economics or philosophy? Normative statements are based on opinions or ethics—what someone believes should be. Positive statements, on the other hand, are testable, even if they may not necessarily be true.
