Return to Set

ECON 2133: Exam 1

Economics
Art or Science of making decisions
Flip
Scarcity
the limited nature of society's resources
Flip
Efficiency
when society gets the most from its scarce resources
Flip
Equality
when prosperity is distributed uniformly among society's members
Flip
opportunity cost
whatever must be given up to obtain it it is the relevant cost for decision making*cost is not just the monetary value!
Flip
Rational People
systematically and purposefully do the best they can to achieve their objectives.
Flip
Marginal changes
incremental adjustments to an existing plan
Flip
Incentive
Something that induces a person to act, i.e. the prospect of a reward or punishment.
Flip
Market
a group of buyers and sellers (need not be in a single location)
Flip
Market Economy
allocates resources through the decentralized decisions of many households and firms as they interact in the markets.
Flip
Market Failure
when the market fails to allocate society's resources efficiently
Flip
Externalities
when the production of consumption of a good affects bystanders (e.g. pollution)
Flip
Market Power
a single buyer or seller has substantial influence on market price (e.g. monopoly)
Flip
Productivity
the amount of goods and services produced per unit of labor
Flip
The most important determinant of living standards: ________
productivity
Flip
Inflation
increases in the general level or prices in the long run,inflation is almost always caused by excessive growth in the quantity of money, which causes the value of money to fall.
Flip
In the short run (1-2 years)
many economic policies push inflation and unemployment in opposite directions
Flip
Microeconomics
is the study of how households and firms make decisions and how they interact in markets
Flip
Macroeconomics
is the study of economy-wide phenomena, including inflation, unemployment, and economic growth.
Flip
Economist play two roles
1. scientists 2. policy advisors
Flip
Scientific Method
the development and testing of theories about how the world works.
Flip
Positive statements
attempt to describe the world as it is positive statements can be confirmed or refuted, normative statements cannot
Flip
normative statements
attempt to prescribe how the world should be
Flip
Model
a highly simplified representation of a more complicated reality.
Flip
Circular-flow diagram
a visual model of the economy, shows how dollars flow through markets among households and firms
Flip
Two markets
-the market for goods and services -the market for "factors of production"
Flip
Factors of Production
the resources the economy uses to produce goods and services including: labor, land and capital
Flip
Firms
buy/hire factors of production, use them to produce goods and services
Flip
Households
own factors of production, sell/rent them to firms for income Buy and consume goods and services
Flip
Production Possibilities Frontier (PPF)
a graph that shows the combinations of two goods the economy can possibly produce given the available resources and the available technology
Flip
( 1 of 30 )

View

  • Term
  • Definition
  • Both Sides

Study

  • All (30)

Shortcut Show

Next

Prev

Flip