Unit 1 Introduction To Microeconomics Flashcards

1
Q

What is economics

A

The study of scarcity the study of how people use resources and respond and respond to incentives or the study of decision making

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2
Q

Basic economic problem

A

Individuals have unlimited wants yet have limited resources to satisfy such wants

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3
Q

Definition of a need

A

Something needed to survive

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4
Q

Definition of want

A

Something that is desired

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5
Q

What is a normative statement

A

Statements that make a vague judgement about what ought to be or what should be

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6
Q

Positive statement economic

A

Statements that describe the world as it is, without making any value judgementa

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7
Q

What sea free good

A

A good that is not scarce and therefore is available without limit

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8
Q

What is an economic good

A

Items that satisfy human wants and provide utility or usefulness and are scarce

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9
Q

Difference between micro and macro economics

A

Microeconomics is economic behaviours within households and companies and macro economies is the economy regionally and across the world

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10
Q

Utility definition

A

The usefulness or enjoyment s consumer can get from a service or good

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11
Q

What are three questions of resource allocation

A

What ?how? And for whom?

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12
Q

What are 4 factors of production

A

Land
Labour
Capital
Entrepreneurship

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13
Q

Rewards of 4 factors of production

A

Land-rent
Labour-wages
Capital-interest
Entrepreneurship -profit

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14
Q

What is opportunity cost

A

Money or benefits lost by not selecting a particular option during the decision making progress

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15
Q

What is meant by rationality

A

When you make a choice join will choose the thing you like the best

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16
Q

3 different economic systems

A

A command economy
Market economy
Mixed economy

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17
Q

Command economy resources

A

Are allocated through the state and government

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18
Q

Command economy resources

A

Are allocated through the state and government

19
Q

How are resources allocated in market economy

A

Market use price as signals to allocate resources to there highest valued uses

20
Q

Mixed economy resources

A

Allocated by a combination of five rent firms and the market

21
Q

Productive efficiency

A

The ability of a firm to produce goods or services at the lowest possible costs given through level of output and the available technology

22
Q

Allocative efficiency

A

An efficiency market whereby all goods and services meet the need and wants of society

23
Q

3 economic agents

A

Producers
Consumers
Government

24
Q

Economic agents allocation of resources

A

They respond to incentives which can allocate scarce resources to provide the highest utility to each agent

25
Q

assumption of rationality in mainstream economics

A

People would rather take actions that benefit them versus actions that are neutral or harm them

26
Q

How do you use a ppc diagram to illustrate opportunity costs

A

A straight line represents constant opportunity cost and a bowed out line repesents increasing opportunity costs

27
Q

How does a ppc diagram illustrate economic growth

A

Represent by a shift of the ppc

28
Q

How does a ppc diagram illustrate unemployment

A

When production is inside the production possibilities curve

29
Q

How does a ppc diagram illustrate allocative efficiency

A

A point on the ppc that meets the need of a particular society

30
Q

How is productive efficiency illustrated in a ppc diagram

A

Pointe on the ppc that are efficient

31
Q

Why are incentives so important in economics

A

Motivate people to behave in a certain manner

32
Q

What roles do house hold play in the economy

A

Sellers in the market for resources

33
Q

What roles do firms play in the economy

A

They allocate resources to the market

34
Q

What role do the government play in the economy

A

Provide the legal and social frameworks , maintain competition, provide public good and services and keep a stable economy

35
Q

Advantages of free market economic system

A

Efficient resource allocation, competition, innovation and product variety

36
Q

What are the disadvantages of free market economy

A

Monopolies, no government , poor working conditions and unemployment

37
Q

Advantages of free market economy

A

Efficient resource allocation, competition, innovation and product variety

38
Q

Disadvantages of mixed market

A

Potentially government failure such as corruption and lack of innovation

39
Q

Advantages of mixed economy

A

Freedom to posses the means of production , can protest, but sell and hire as needed

40
Q

Advantages of command economy

A

Government can ensure full employment
Government can control inflation
Government can develop specific industries

41
Q

Disadvantages of command economy

A

There is less economic freedom
Government can distort pricing signals which lead to inefficiencies in economy

42
Q

Characteristics of command economy

A

Gove,rental control of wages and pricing, limited property rights,government ownership of key business industries

43
Q

What is the normal range of government spending within which an economy is deemed to be a mixed economic system

A

mixed economy is an economic system that accepts both private businesses and nationalized government services, like public utilities, safety, military, welfare, and education. A mixed economy also promotes some form of regulation to protect the public, the environment, or the interests of the state.