Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Economics > Micro: Economic Methodology and the Economic Problem > Flashcards

Micro: Economic Methodology and the Economic Problem Flashcards

1
Q

what is economics

A

Economics is a social science

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

what does economics study

A

Economics studies how humans make decisions under scarcity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

what do economic agents make economic decisions based on

A

Political judgements
Short-term outcomes
Moral judgements
Normative statements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

what is short-termism

A

The choices a someone makes may be motivated by short term gain

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

what are the disadvantages of short-termism

A

But this decision may not lead to the best outcome in the long term

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

what are examples of short-termist policies

A

Lowering income tax today
Promising to remove university tuition fees
Paying staff higher wages now

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

when does scarcity occur

A

At any point in time, there is only a finite amount of resources available

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

what does scarcity mean

A

Scarcity means that our wants and needs are greater than the amount of available resources

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

why does scarcity happen

A

because resources and raw materials are needed to produce these goods and services, but they are in limited supply

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

what type of decisions do economists study

A

The types of decision include: individual, family, business and societal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

how is economics different to other social sciences

A

Controlled laboratory tests aren’t possible
Economists rely on the ceteris paribus assumption
So when economists study the relationship between two factors, they’ll assume that one factor changes while the rest stay constant

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

how is economics similar to other social sciences

A

Models and theories are used to explain real world evidence
models use real life data
Statistical analytics can be used
models rely on assumptions and simplifications

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

what are positive statements

A

Positive statements describe the world as it is. They are objective statements that can be proved

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

what are normative statements

A

Normative statements describe how the world should be. They are opinions that contain value judgements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

where are value judgements found

A

Value judgments are often found in normative statements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

what are value judgements

A

They are judgements about society that cannot be quantified and tested

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

what do value judgements affect

A

Value judgements affect economic decision-making, so normative statements are important

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is the main purpose of economic activity

A

The main purpose of economic activity is to produce goods and services to satisfy consumers’ wants and needs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What are needs

A

Needs - things people can’t live without

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What are examples of needs

A

Water is an example of a need

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is a want

A

Wants - things people can live without but desire

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What is an example of a want

A

An example of a want is smartphones

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What is the basic economic problem

A

There are not enough resources on earth to satisfy humans’ unlimited wants and needs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What does the basic economic problem involve working out

A

The basic economic problem involves working out how to allocate limited resources as effectively as possible to satisfy people’s unlimited wants and needs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Why do we have to choose on the best way to use resources
There are scarce resources in society. Because of this, choices have to be made on how to use these resources
26
What are the foundation of economic decision
The foundation of economic decisions are: What goods/services we produce? How we produce those goods/services? Who we produce those goods/services for?
27
What does ceteris paribus mean
everything else remains equal
28
What are the four types of economic resources
Land Labour Capital Enterprise
29
What is enterprise as an economic resources
The entrepreneurial actions that individuals take to try and make a profit
30
What is land as an economic resource
Finite and non-finite resources found on the planet, including animals, water and natural materials The exception is air, which is infinite
31
What is capital as an economic resources
The equipment used to generate goods and services within the production process Capital must be made before it can be used
32
What are the two different types of the economic resource labour
Human capital | Labour force
33
What is human capital
the value human labour brings to the production process
34
What is labour force
the population that can work
35
What type of people have a higher human capital
People who are more useful in the workplace have a greater human capital
36
What type of air is finite
Although air itself is not finite, clean, non-polluted air is
37
What does scarcity mean people need to make choices between
Scarcity means that people need to make choices between goods and services
38
How must resources be allocated
Resources must be allocated in a way that is seen to be rational
39
What is up to economic agents to decide
It's up to economic agents to decide on how to allocate resources
40
What are the three main economic agents
The three main economic agents are: Producers Consumers Governments
41
Who are producers
people/firms that produce goods or supply services
42
Who are consumer
people/firms who purchase the goods/services
43
What do governments do for economies
establishes rules for economies
44
What actions does economic activity include
Economic activity includes a wide variety of actions, such as: Production of goods and services Consumption of goods/services
45
Because of scarce resources what questions must we ask about economic activity
Because resources are scarce, we must ask three questions about economic activity. What, how, and who to produce for?
46
What should producers decide
Producers must decide what products to make and the selling price of products
47
What must consumers decide
Consumers must decide what products to purchase and how much they want to spend on products
48
What must governments decide
Governments must decide how much they should get involved in the production and consumption process
49
What is the opportunity cost defined as
The opportunity cost is defined as the 'next best alternative foregone'
50
What is an example of opportunity costs exceeding monetary costs
attending university
51
When do people face tradeoffs
People face a tradeoff when they make choices
52
When is opportunity cost useful
Opportunity cost is a useful concept when thinking about allocating resources
53
What are the issues of opportunity cost
Not all factors have alternatives Some alternatives are unknown Agents may lack information on alternatives It can be difficult to switch some factors to another use
54
What does the production possibility frontier explain
The production possibilities frontier (PPF) model explains the constraints experienced by society
55
Draw a PPF
Seneca 1.1.5
56
Where is opportunity cost on a PPF
The opportunity cost is the slope of the PPF
57
Why is the PPF curved
The PPF is curved because of the law of diminishing returns
58
When does the PPF shift outward
The PPF shifts outward if there is economic growth
59
Why does economic growth cause an outward shift on the PPF
This is because the productive capacity of the economy has increased
60
What tradeoffs occur of the PPF
To produce more of one good, you must produce less of another
61
What does it mean if there are points underneath the PPF
If there are any points underneath the PPF, this means not all economic resources are being deployed
62
What points along the PPF is productivity efficient
Every point on the Production Possibility Frontier (PPF) is productively efficient
63
What does efficiency refer to
Efficiency refers to a lack of waste
64
What is static efficiency
Static efficiency refers to the efficiency at a point in time
65
What can static efficiency be separated into
This can be separated into allocative and productive efficiency
66
What does it mean if you are productively efficient
With all available inputs and technology, it is impossible to produce more of one good without decreasing the quantity of another good being produced
67
What is allocative efficiency
When a specific combination of goods is efficient for society
68
What does allocative efficiency refer to
It refers to a point on the PPF, not the entire curve
69
How is economic growth shown on a PPF
Economic growth is shown by an outward shift
70
How is negative economic growth shown on a PPF
Negative economic growth is shown by an inward shift
71
How is reallocation of resources shown on a PPF
If there is a fixed amount of resources, then shifts along the PPF reflect the reallocation of resources
72
What does increasing resources cause the PPF to do
Increasing resources - PPF shifts outwards as output increases
73
What does decreasing resources cause the PPF to do
Decreasing resources - PPF shifts inwards as output decreases
74
What do improvement in technology cause to happen to the PPF
When resources are fixed but output increases (e.g. through improving labour or technology), the PPF shifts outwards
75
What does it mean if there is a point outside the PPF
it is not currently possible to produce at this point

Economics (16 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions