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ECO101
economics
| Question | Answer |
|---|---|
| economics | a study of decision making in a world of scarcity. |
| economics | studies how people allocate scarce resources in an attempt to satisfy unlimited wants/needs |
| scarcity | limited resouces in relation to unlimited wants |
| tradeoff | giving up one thing for something else |
| value judgment | the relative importance one assigns to an action or alternative |
| opportunity cost | the cost of a purchase or decision measured in terms of a forgone alternative; what was given up to make a purchase or carry out a decision |
| efficiency | producing the largest attainable output of a desired quality with a given set of resources; producing at the lowest possible cost |
| equity | justice or fairness in the distribution of goods and services |
| resources (factors of production) | persons and things used to produce goods and services; limited in amount; categorized as labor, capital, land, and entrepreneurship |
| labor | physical and mental human effort used to produce goods and services |
| capital | items, such as machinery and equipment, used in the production of goods and services |
| land | productive inputs that originate in nature, such as coal and fertile soil |
| entrepreneurship | the function of organizing resources for production and taking the risk of success or failure in a productive enterprise |
| wages | income for labor |
| interest | income for capital |
| rent | income for land resources |
| profit | income for carrying out the entrepreneurial function. |
| theory | tells us about relationships |
| policy | deals with guidelines and actions |
| economic theory | a formal explanation of why an event occurs, or gives a generalized interpretation of the relationship between economic variables |
| model | the setting within which an economic theory is presented |
| assumptions | conditions held to be true within a model |
| econometrics | the use of statistical techniques to describe the relationships between economic variables |
| economic policy | a guide for a course of action |
| graph | an illustration showing the relationship between two variables that are measured on the vertical and horizontal axes |
| direct relationship | two variables move in the same direction: when one increases, so does the other; graphs as an upward sloping line |
| inverse relationship | two variables move in opposite directions: when one increases, the other decreases; graphs as a downward-sloping line |
| production possibilities table | gives the various amounts of two goods that an economy can produce with full employment and fixed resources and technology |
| unemployment | resources available for production are not being used |
| economic growth | an increase in an economy's full employment level of output over time |
| capital goods | goods, such as machinery and equipment, that are used to produce other goods and services |
| consumer goods | goods, such as food and household furniture, that are produced for final buyers |
| macroeconomics | the study of individual decision making units and markets within the economy |
| efficiency | results when a good or service of a desired quality is produced at the lowest resource cost |
| efficiency | allows the greatest attainable lessening of scarcity because resources are used to their fullest |
| economic theory | explored within the framework of a model that includes variables, assumptions or conditions held to be true, data, and conclusions |
| economic policies | value judgments are important in the selection of these |
| basic economic decisions | the choices that must be made in any society regarding what to produce, how to produce, and to whom production is distributed |
| economic system | the way in which an economy is organized to make the basic economic decisions |
| traditional (agrarian) economy | an economy that relies largely on tradition, custom, or ritual when making the basic economic decisions |
| traditional economy strengths I | economic security/stability |
| traditional economy strengths II | strong family/community ties |
| traditional economy strengths III | economic safety net for most members |
| traditional economy weaknesses I | lack of innovation or change |
| traditional economy weaknesses II | few economic opportunities for individuals |
| traditional economy weaknesses III | reinforcement of social hierarchies and low levels of production |
| Market economy I | rooted in the belief that decisions are made by individuals, or in a philosophy of individualism |
| Market economy II | intentions |
| price system | a market system; one in which buyers and sellers communicate through prices in markets |
| private property rights | essential to a market economy. gives individuals and businesses the right to own resources, goods, and services, and to use them as they choose |
| free enterprise | the right of a business to make its own decisions and to operate with a profit motive |
| capitalism | an economic system with free enterprise and private property rights; economic decision making occurs in a market environment |
| circular flow model | a diagram showing the real and money flows between households and businesses in output, or product, maekets and input, or resource markets |
| output markets (Product Markets) | markets in which businesses are sellers and households are buyers; consumer goods and services are exchanged |
Created by:
hkkfahy
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