Lecture #1 Flashcards
1
Q
What are the four categories of factors of production?
A
- Land
- Labour
- Capital
- Entrepreneurship
2
Q
what are the six key ideas (economic way of thinking)
A
- A choice is a trade-off
- making a rational choice
- benefit- what you gain
- cost- what you lose
- how much? choosing at the margin
- choices respond to incentives
3
Q
Describe “ a choice is a trade-off”
A
-you must give up one thing to get something else
4
Q
describe “making a rational choice”
A
-benefits must exceed costs
- different preferences will dictate choices
5
Q
describe “benefit”
A
- pleasure; determined by preferences
-some benefits small, some are large
6
Q
describe “ cost-what you must give up”
A
- opportunity cost; highest values alternative forgone
7
Q
describe “how much, choosing at the margin”
A
- comparing marginal benefit and marginal cost
8
Q
describe “choices respond to incentives”
A
-rational individuals are driven by self-interest
9
Q
What is a scatter diagram
A
- plots the value of one variable against the value of another variable
- reveals if a relationship exists between said variables
10
Q
Variables in a graph that move in the same direction are…
A
direct/positive
11
Q
variables that move in opposite directions are…
A
inverse/negative
