Unit 1 - What is Economics Flashcards
What is Economics?
Economics is the science of scarcity, studying how people and societies allocate limited resources to meet unlimited wants.
Good vs Bads
Goods: Provide satisfaction (e.g., food, clothing).
Bads: Cause dissatisfaction (e.g., pollution).
Opportunity Costs
The trade-off of choosing one option over another.
Helps in making better decisions by weighing benefits and losses.
Ceteris Paribus
A principle that means “all other things being equal.”
Simplifies economic analysis by isolating one variable at a time.
Marginal Calculations
Assess the extra benefits or costs of a decision.
Important for optimizing choices.
Microeconomics
Focuses on individuals and firms.
Explores how they make decisions (e.g., pricing, production).
Macroeconomics
Looks at the economy as a whole.
Examines national trends like GDP, inflation, and unemployment.
Positive Economics
Objective and fact-based.
Explains “what is” happening in the economy.
Negative Economics
Subjective and value-based.
Discusses “what should be” in economic policies.
Scarcity
Scarcity: Limited resources force prioritization and efficient use.
Resources
Resources: Categorized into land, labor, capital, and entrepreneurship—essential for production.
Decision Making
Decision-Making: Opportunity cost and marginal analysis guide individuals and businesses to optimize choices.
