EIT Prelims

5.0(2)
learnLearn
examPractice Test
spaced repetitionSpaced Repetition
heart puzzleMatch
flashcardsFlashcards
Card Sorting

1/96

flashcard set

Earn XP

Description and Tags

ito ba ang economic book na tinutukoy ni maam

Study Analytics
Name
Mastery
Learn
Test
Matching
Spaced

No study sessions yet.

97 Terms

1
New cards

Microeconomics

Study of small individual economic units

ex. households, firms and industries, making choices

2
New cards

Macroeconomics

Studies the aggregate behavior of the entire economy

ex. unemployment, inflation, GDP, international trade, etc

3
New cards

Land

Refers to all the free gifts of nature; some of these resources are renewable while others are non-renewable.

4
New cards

Labor

Refers to any human effort (manual or mental) which is directed to the production of goods or services.

5
New cards

Capital

Refers to those man-made resources that are used to produce goods or services in the future.

6
New cards

Fresh Talent Initiative

Has allowed many Eastern Europeans to live and work in Scotland.

7
New cards

Investment

When capital goods are bought, this is called __ ;spending by firms on capital goods.

8
New cards

Industrial

Type of Capital

Used by firms e.g. factories, offices, machineries

9
New cards

Social

Type of Capital

Belongs to the whole community e.g. schools, hospitals, roads

10
New cards

Private

Type of Capital

Belongs to individuals e.g. houses

11
New cards

Financial

Type of Capital

Money waiting to be used to buy capital goods

12
New cards

Enterprise

Refers to the decision making and risk taking of entrepreneurs.

13
New cards

Alpha Minds

Countries are concerned with the shortage of talented entrepreneurs or __

14
New cards

Individuals

Level

Must choose what to buy out of their limited incomes; decide how to spend their income in a way which gives them the greatest level of satisfaction.

15
New cards

Producers

Level

Must choose what to produce with their limited resources. They are motivated by the desire to maximise profits.

16
New cards

Governments

Level

Must choose what services to provide out of their limited tax revenues. They spend tax revenue in a way that they think will maximise society welfare.

17
New cards

Scale of Preference

For an individual consumer, the opportunity cost of choosing a product is the next item on his/her __

18
New cards

Firm

Agent

For a producer the opportunity cost of producing a good is the next most profitable product which could have been produced with the resourced used.

19
New cards

Government

Agent

The opportunity cost of providing a service is the next best service which it could have been provided with the resources used.

20
New cards

Economic Resources

Used in the production of goods (tangible) and services (Intangible); Classified as land (asset), labor(expenses), capital(equity), and enterprise

21
New cards

Factors of Production

Economic Resources are sometimes called as __

22
New cards

Asset

Resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit.

23
New cards

Liability

Something a person or company owes, usually a sum of money.

24
New cards

Needs

Things necessary to human survival e.g. food, shelter

25
New cards

Wants

Goods/services desired by the consumer e.g. travel, luxury cards.

26
New cards

Scarcity

Economic resources are limited compared to wants which are unlimited. Wants always exceed the limited resources

27
New cards

Choice

Because of scarcity, we cannot fulfill all wants and must choose from the available alternatives.

28
New cards

Opportunity Cost

The second best alternative forgone after making a choice. Every choice involves a sacrifice or trade-off; real cost

29
New cards

What to Produce?

Means choosing the mix of goods & services to produce

30
New cards

How to Produce?

Who will do the production and which method of production will be used.

31
New cards

For Whom to Produce?

Means who will consume the goods & services after they have been produced; How will we decide who receive the output?

32
New cards

Planned Economic System

All decisions about resource allocation are made by the government. This system is based on the principle of equity.

33
New cards

Pure Command Economy

Little incentive for workers to raise productivity; poor quality control, and little innovation by firms as no profit motive existed.

All resources are government-owned

One person (dictator) or a group of officials decide WHAT products are needed

34
New cards

Free Economic System

In its purest form is only an economic model and as such, does not exist in the real world.

35
New cards

Private Enterprise

Resources are owned by private individuals. No barriers prevent people from owning private property.

36
New cards

Competition

Exists between producers and between consumers. A high degree represents the working of the free market system.

37
New cards

Consumer Sovereignty

AKA ruling the market

38
New cards

Price Mechanism

Resources are allocated by this; Acts as a signal to producers. Consumers buy particular goods, and are, in effect, casting a vote.

39
New cards

Production Possibilities Frontier

It is the point at which economy is most efficiently producing its goods and services in a given time period, and therefore allocating its resources in the best way possible.

40
New cards

Trade-Off

Is often expressed as opportunity cost.

Involves a sacrifice that must be made to obtain a desired product or experience.

41
New cards

Rational Choice

One that uses the available resources to most effectively satisfy the wants of the person making the choice.

42
New cards

Marginal Benefit

The benefit that a person receives from consuming one more unit of a good or service.

43
New cards

Marginal Cost

The opportunity cost of producing one more unit of a good or service.

44
New cards

Economic Growth

The ability of an economy to produce greater levels of output, represented by an outward shift of its production possibilities curve

45
New cards

Comparative Advantage

The ability of a person to perform an activity or produce a good or service at a lower opportunity cost than someone else.

46
New cards

Absolute Advantage

When one person is more productive than another person in several or even all activities.

47
New cards

Positive Economic Analysis

Describes what exist and how things work.

Descriptive

They make a claim how the world is

48
New cards

Normative Economic Analysis

Looks at the outcome of economic behavior through judgments and perceptions of courses of action. 

They claim how the world should be

49
New cards

Post Hoc Ergo Propter Hoc

Relates to two events as if the first event causes the second to happen.

50
New cards

Ceteris Paribus

Meaning all things being equal or held constant.

Each variables must be studied one at a time

51
New cards

Fallacy of Composition

States that what is true for a component is also true for the entire thing.

52
New cards

Sweeping Generalization Fallacy

Committed when a statement wraps up everything with no exemptions to the rule, as if making it a general statute.

53
New cards

Econometrics

Is the application of statistical and mathematical theories to economics for the purpose of testing hypotheses and forecasting future trends.

54
New cards

Adam Smith

Father of Econometrics

55
New cards

Invisible Hand

Means that what is produced, what quantity and at what price.

56
New cards

Pure Market Economy

NO government involvement in economic decisions. Private firms account for all production.

Consumers decide WHAT should be produced. They do this through the purchases they make.

57
New cards

Traditional Economy

Economy is shaped largely by custom or religion.

Customs and religion determine the WHO, WHAT, and HOW

58
New cards

Privatization

Is a common aspect of transition from a command economy to free enterprise system; state-owned industries are sold to private individuals and companies.

59
New cards

Mixed Economy

Most economies in the world today are __.

Both capitalism and socialist economies

60
New cards

Capitalism

Trade and industry are controlled by private owners for profit, rather than the govt.

61
New cards

Socialism

Economic and political system based on public of the means of production. Those means include the machinery, tools, and factories used to produce goods that aim to directly satisfy human needs

62
New cards

Demand

  • Relationship between quantity demanded and price within a specific period.

  • The relationship between maximum willingness to pay in return for something of value.

  • Emphasizes on the buyer or consumer.

63
New cards

Output Market

  • Goods and services are exchanged.

  • The finished product.

64
New cards

Input Market

Resources used to produce products are exchanged.

65
New cards

Market Demand

  • The horizontal sum of individual demands.

  • Commands our interest.

  • This is the total demand from all households in a particular market.

66
New cards

Quantity Demanded

The amount (number of units) of a product that a household would buy in a given time period if it could buy all it wanted at the current market price.

67
New cards

Demand Schedule

A table showing how much of a given product a household would be willing to buy at different prices.

68
New cards

Demand Curve

  • Usually derived from demand schedules.

  • A graph illustrating how much of a given product would be willing to buy at different prices.

69
New cards

Diminishing Marginal Utility

  • The more you consume a good or service, the more your satisfaction diminishes.

  • Decrease in satisfaction.

70
New cards

Income

  • The sum of all households’ wages, salaries, profits, interest payments, rents, and other forms of earnings in a given period of time.

  • It is a flow measure.

71
New cards

Wealth

  • Also known as net worth.

  • The total value of what a household owns minus what it owes; asset minus liability.

  • It is a stock measure.

72
New cards

Normal Good

  • Increased income leads to higher demand.

  • Also called necessary goods.

  • Causes a forward shift in the demand curve.

73
New cards

Inferior Good

  • Increased income leads to fall in demand.

  • When incomes are low, or the economy contracts, these goods become a more affordable substitute for a more expensive good.

74
New cards

Luxury Good

  • Increased incomes leads to a bigger percentage increase in demand.

  • They are not deemed essentials or necessities to live.

75
New cards

Substitutes

Goods that can serve as replacements for one another.

76
New cards

Complements

  • Goods that “go together.”

  • When the price of one increases, the demand for both goods decreases because people are less likely to buy them together.

77
New cards

Individual Household Demand

This is about what one household wants or needs.

78
New cards

Supply

The total amount of a specific good or service that is available to consumers.

79
New cards

Supplier

Anyone who offers an economic product for sale.

80
New cards

Supply Schedule

Table showing how much of a product firms will supply at different prices.

81
New cards

Quantity Supplied

Represents the number of units of a product that a firm would be willing and able to offer for sale at a particular price during a given time period.

82
New cards

Supply Curve

  • Usually derived from supply schedules.

  • Graph illustrating how much of a product a firm will supply at different prices.

83
New cards

Individual Supply

This is about how much 1 company can produce or sell.

84
New cards

Market Supply

  • This is the total supply from all companies in a particular market.

  • Adds up the quantities that each company can supply.

85
New cards

Market Equilibrium

Situation in which prices are relatively stable and the quantity of goods or services supplied is equal to the quantity demanded.

86
New cards

Equilibrium Price

  • The price that “clears the market.”

  • No shortage or surplus.

87
New cards

Surplus

Quantity demanded is less than quantity supplied.

88
New cards

Equilibrium

  • Quantity demanded is equal to quantity supplied.

  • There is no tendency for the market price to change.

89
New cards

Shortage

Quantity demanded is greater than quantity supplied.

90
New cards

Market Disequilibria

Happens when there is excess demand (shortage) and excess supply (surplus).

91
New cards

Price Ceiling

  • If price is fixed below the market clearing price.

  • Creates a shortage because Qd is greater than Qs.

92
New cards

Price Floor

  • If price is fixed above the market clearing price.

  • Creates a surplus because Qd is less than Qs.

93
New cards

Elasticity

  • Economists use this to measure how much consumers respond to changes in these variables.

  • Refers to the measure of the responsiveness of quantity demanded or quantity.

94
New cards

Elastic Demand

Occurs when a relatively small change in price causes a greater change in the quantity demanded.

95
New cards

Inelastic Demand

If the quantity demanded responds only slightly to changes in the price

96
New cards

Demand Elasticity

A term used to indicate the extent to which changes in price cause changes in quantity demanded.

97
New cards

Price Elasticity of Supply

Measures the responsiveness of quantity supplier to a change in price.