Introduction To Economics? Flashcards
What are concepts of economy?
- Efficiency
- Security (unlimited wants, limited resources)
- Choice (What to consume and give up)
- Interdependence
- Change
- Economic Well-Being
- Equity
- Sustanability
Economics is a
- Social Science
- Study of people in a society
- Retaining items
Opportunity cost?
Next best alternative given up when a choice is made
Capital?
Physical man made objects
Enterprise
Leaders who bring factors of production to create goods and services
What are 3 basic questions asked in Economics?
What to produce
How to produce
Who to produces
What is an economic system?
What is a gout economic system
Planned economy, communism, Equality, Lack of inceptive
What is a market economic system
Free market economy, capitalism, variety in quality, inequality
What is a free market?
- Economic decisions made by consumers and producers
Private firms
What is a centrally planned market?
Economic decisions made by gout:
- Sums of all production
- Decides how resources are used
What is a production possibilities curve (PPC)?
Model designed to show alternative combinations a firm or country can produce using their maximum resources
What are assumptions of PPC’s?
- 2 goods produced
- Full employment
- Fixed resources
- Fixed technology
What is a constant opportunity cost on a PPC?
REsources can be easily exchangeable to produce either goods leading to constant opportunity cost, this can result in a straight line in a PPC
What is effeciency?
Resources use in the best possible way, no waste and no improvements needed.
What is potential growth?
Increase in maximum current produces potential growth, results in a shift of PPC due to change in quality or quantity of factors of production or important in technology
What is actual growth?
Achieved by making better uses of resources?W
What is circular growth
Government Spending + Investments + Exports = J
Taxes + Savings + Imports = W
J = Injections
W= Withdrawals
J=W (National Equilibrium)
What is positive economics?
Positive economics is concerned with objective statements of how a market or an economy works . These positive economic statements are based on empirical evidence and tend to be statements of fact.
EX: Healthcare will increase government spending by 20%
What is negative economics?
Normative economics focuses on value judgements. These judgements are built around opinions and beliefs as to what the best economic policies or solutions may be
EX: Healthcare should be free for all citizens at the expense of the government
What is equity?
Refers to the state of being fair
What is equality
Refers to the state of being with respect to something
