Unit 1 Flashcards
What’s the overarching idea of Scarcity?
Individuals and societies are forced to make choices because resources are scarce.
Define Economics
Behavior science/social science concerned with how scarce resources are allocated among unlimited wants, needs, and desires. (Resources
To be scarce means to be _____ and _____; the opposite of scarcity is _____.
Limited-Wanted-Abundance
Define Scarcity
Fundamental concept of economics; leads to trade-offs (choices).
Resources- _____- _____
FOP-CELL
Factors of Production: Physical Capital- Entrepreneur- Land (Raw Materials/Natural Resources)-Labor (Human Capital).
Define Physical Capital
Buildings- Equipment (for example whiteboards and textbooks).
Define Economic Perspective
A viewpoint that envisions individuals and institutions making rational decisions by comparing the marginal benefits and marginal costs associated with their actions.
Define Opportunity Costs
The amount of other products that must be gone or sacrificed to produce a unit of a product.
Define Utility
The want-satisfying power of a good or service; the satisfaction or pleasure a consumer obtains from the consumption of a good or service (or from the consumption of a collection of goods and services).
Define Purposeful Behavior
People make decisions with some desired outcome in mind.
What’s the purpose of Self-Interested Behavior?
Increase potential self-satisfaction, however it may be derived.
Define Marginal Analysis
The comparison of marginal (extra or additional) benefits and marginal costs, usually for decision making.
_____ is always present when a choice is made.
Opportunity-Cost
Define Scientific Method
The procedure for the systematic pursuit of knowledge involving the observation of facts and the formulation and testing of hypotheses to obtain theories, principles, and laws.
Define Economic Principle
A widely accepted generalization about the economic behavior of individuals or institutions.
What are some things to know about economic principles?
Generalizations- Other-thing-equal assumption- Graphical Expression GOG
Define Generalizations
Economic principles are generalizations relating to economic behavior or to the economy itself.
Define Other-Things-Equal Assumption
The assumption that other factors than those being considered are held constant; ceteris paribus assumption.
What two levels of economics are there?
Microeconomics-Macroeconomics
Define Microeconomics
The part of economics considered with decision making by individual units such as a household, a firm, or an industry and individual markets, specific goods, and services and product and resource prices.
Define Macroeconomics
The part of economics concerned with the performance and behavior of the economy as a whole. Focuses on economic growth, the business cycle, interest rates, inflation, and the behavior of major economic aggregates such as the household, business, and government sectors.
Define Aggregate
A collection of specific economic units treated as if they were one unit. Examples: the prices of all individual goods and services are combined into the price level, and all units of output are aggregated into gross domestic products.
Define Positive Economics
The analysis of facts or data to establish scientific generalizations about economic behavior.
Define Normative Economics
The part of economics involving value judgements about what the economy should be like; focused on which economic goals and policies should be implemented; policy economics.
Positive economics concerns _____, whereas normative economics embodies subjective feelings of _____.
What is- What ought to be
Define Economizing Problem
The choices necessitated because society’s economic wants for goods and services are unlimited but the resources available to satisfy these wants are limited (scarce).
Define Budget Line
A line that shows the different combinations of two products a consumer can purchase with specific money income, given the prodcuts’ prices.
What things to the Budget Line reveal?
Attainable and Unattainable Combinations-Trade-Offs and Opportunity Costs-Choices-Income Changes
For the movie and book combination example, an increase in money income shifts the budget line to the _____ and a decrease in money income shifts the budget line to the _____.
Right-Left
Define Economic Resources
The land, labor, capital, and entrepreneurial ability that are used to produce goods and services; the factors of production. LLCE
Define Land
In addition to the part of the earth’s surface not covered by water, this term refers to any and all natural resources that are used to produce goods and services. Thus, it includes the oceans, sunshine, coal deposits, forests, the electromagnetic spectrum, and fisheries.
