Section I Flashcards
What is scarcity?
Inescapable fact of human existence. (Ex- we only have 24 hours to study, work, play, sleep, and eat)
What is ‘trade off’
Every choice that we make requires that we give something else up
What is the ‘opportunity cost’
The cost of what you choose is what you have to give up to get it
How do economists believe people make choices
By comparing the benefits of each action with the opportunity costs of that action and then select that produces the greatest benefits
What is ‘positive economics’
The tools used to describe economic phenomena and to make predictions about what will happen under certain circumstances (cause and effect)
What is ‘normative economics’
The use of economic analysis to guide des signs about what should be as opposed to what is the case.
According to economists, what makes something efficient
It is efficient if there is no way to improve at least one person’s well being with reducing the well being of another
What are the two broad subfields of economics
Microeconomics and macroeconomics
What does microeconomics concentrate one
Concentrates on individual behavior and the operation on particular markets
What does macroeconomics concentrate on
The overall performance of the national economy
T or F? Does every choice we make involve trade offs
True
Does trade always make everyone involved better off?
Yes
What does Pareto efficient state
The only way that anyone can be made better off is by reducing the well being of one or more other people
What is economics, at its core?
It deals with how individuals make choices and how their decisions/actions interact with one another
