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microeconomics > nature of economics > Flashcards

nature of economics Flashcards

1
Q

economics

A
  • study of choices

- most efficient way to use scarce resources

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2
Q

scarcity

A
  • use of resources and response to incentives
  • wants always exceed what can be produced with limited resources
  • human wants are unlimited
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3
Q

macroeconomics

A
  • looks at the economy as a whole

- impacts of choices on main economic indicators

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4
Q

microeconomics

A
  • how individuals and businesses make decisions (what influences choices) in a world of scarcity
  • bottom-up approach
  • the role consumers and businesses play in the economy
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5
Q

micro breaks down…

A
  1. individuals make decisions based on the concept of utility (satisfaction)
  2. businesses make decisions based on competition faced in the markets
  3. opportunity cost of their actions
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6
Q

ways the pandemic is changing consumer shopping habits

A
  • buy local
  • e-commerce
  • touch-free payments
  • cost-conscious shopping
  • health and hygiene are priorities
  • trying new brands and products
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7
Q

labour shortage

A
  • balance of power has shifted to workers in high-demand industries
  • solution: rescaling
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8
Q

choices and incentives

A
  • deciding to have more of something means deciding to have less of something else
  • financial, moral and social
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9
Q

opportunity cost

A
  • less of something else is the cost of having more of something
  • rational decision making
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10
Q

production possibilities curve

A
  • all possible production combinations of two goods that can be produced
  • scarcity, choice, efficiency, opportunity, unemployment
    going further than the boundary is economic growth
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11
Q

capitalist vs command

A

capitalist: free market, private ownership, self-interested, supply and demand
command: planned economy, public ownership of all resources, production and price regulated
planned: decisions made by the private and public sector

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12
Q

hello

A

allo

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13
Q

adam smith

A

father of economics (1776 wealth of nations)

- the water and diamond paradox

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14
Q

law of demand

A

when the price goes up, the quantity demanded goes down

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15
Q

law of supply

A

when the price goes up, the quantity supplied goes up

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16
Q

equilibrium

A

Qd = Qs

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17
Q

pepit (non-price determinants of demand)

A 
price-related goods (complements and substitutes)
expectations 
population (nb of buyers)
income (normal goods and inferior goods)
tastes and preferences
18
Q

pints (non-price determinants of supply)

A

price expectations
input costs
number of firms in the industry
subsidies and taxes

19
Q

shifts in demand

A

increase: shortage
decrease: surplus

20
Q

shifts in supply

A

increase: surplus
decrease: shortage

21
Q

price system

A

prices are constantly changing to reflect changes in supply and demand

22
Q

simultaneous shifts

A

if both the supply and demand curves shift simultaneously, the outcome is indeterminate for either equilibrium price or quantity

23
Q

both demand and supply increase

A

change in price is indeterminate

equilibrium quantity increases unambiguously

24
Q

both supply and demand decrease

A

change in quantity is indeterminate

equilibrium price increases unambiguously

25
Q

supply decreases and demand increases

A

equilibrium price increases

change in equilibrium quantity is uncertain

26
Q

supply increases and demand decreases

A

equilibrium price decreases

change in the equilibrium quantity is uncertain

27
Q

consumer behaviour

A

how people decide to spend their money based on their individual preferences and budget constraints

28
Q

consumer’s choice

A

how needs, perceptions and info shape consumer choices

  • maximize utility
  • incentives
29
Q

consumer confidence

A

how consumer expectations for the future influence spending saving investment and labour participation (non-price determinants of demand)

30
Q

cost minimization (producer behaviour)

A

a necessary condition for profit maximization

31
Q

business confidence

A

how producer expectations for the future influence hiring, capital investment and supply

32
Q

producer behaviour

A

actions of firms in hiring and combining productive inputs to supply commodities at appropriate prices

33
Q

competitive conditions

A

the number and size distribution, forms, entry conditions, and the extent to which production differentiation (or branding) limits price rivalry

34
Q

financial statement

A

revenues and expenses or profit and loss statement

35
Q

gdp and its “factors”

A
  • economic growth

- consumption + investments + government spendings + (exports - imports)

36
Q

unemployment

A

when a person is available to work and is seeking work

37
Q

inflation

A
  • an upward movement in the average level of prices in an economy
  • purchasing power
  • target control of 1-3% set by the bank of Canada
38
Q

normal recession

A
  • sharp decline in economic activity

- a decline in gdp for two consecutive quarters

39
Q

pandemic recession

A
  • demand vs supply shocks
  • small vs large shock
  • concentrated vs widespread
40
Q

the k-shaped recession recovery

A

after a recession, some parts of the economy recover and some parts sink or stagne

microeconomics (5 decks)

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