Introduction to Economics - Video Practice Flashcards

A comprehensive set of practice flashcards covering key concepts from the lecture notes on Introduction to Economics, micro vs macro, scarcity, market types, economic systems, and market dynamics.

What is the definition of economics as given in the notes?

The study of how individuals, businesses, and governments make choices about allocating scarce resources to satisfy unlimited wants.

What is an economy?

The system through which a society organises the production, distribution, and consumption of goods and services.

What is the difference between material and non-material living standards?

Material standards are tangible goods/services measured by GDP, income, and consumption; non-material standards are intangible aspects like freedom, happiness, safety, and work-life balance.

Which measures are used to assess well-being beyond material standards, as mentioned in the notes?

OECD Better Life Index and the Human Development Index (HDI).

What are the benefits and limitations of using GDP as a measure of economic growth and material living standards?

Benefits: easy to measure, compares countries, tracks growth, reflects material prosperity. Limitations: ignores distribution of wealth, ignores non-material wellbeing, doesn’t account for environmental damage or unpaid work.

What are the pros and cons of strong economic growth according to the notes?

Pros: higher incomes, lower unemployment, more government revenue. Cons: environmental harm, inequality, inflation, overuse of resources.

What is the difference between microeconomics and macroeconomics?

Microeconomics studies individuals, households, and firms (e.g., supply and demand); macroeconomics studies the whole economy (e.g., unemployment, inflation, GDP).

What is opportunity cost?

The value of the next best alternative forgone when a choice is made.

Who are the four key participants in the Australian economy?

Households (consumers, provide labour); Businesses (produce goods/services); Government (regulates, provides services, taxes); Financial sector (manages savings, investments, loans).

What are the four factors of production?

Land (natural resources); Labour (human effort/skills); Capital (machinery/tools/infrastructure); Entrepreneurship (innovation and risk-taking).

Give examples of opportunity cost in three scenarios.

Individual: movie vs studying → cost is lost study time. Government: hospital vs highway → cost is the highway. Business: phones vs laptops → cost is the laptops.

What are the three basic economic questions?

What to produce? (which goods and services); How to produce? (which methods/resources); For whom to produce? (who receives them).

What is an economic system?

The way a society organises production, distribution, and consumption.

What are the differences between market, planned, and mixed economies?

Market: decisions by individuals and firms based on supply and demand. Planned: government makes all decisions about production and distribution. Mixed: combination of market forces and government intervention.

List the strengths and weaknesses of a market economy.

Strengths: efficient, encourages innovation, choice. Weaknesses: can create inequality, ignores environment, can fail in crises.

List the strengths and weaknesses of a planned economy.

Strengths: equality, basic needs provided, stability. Weaknesses: inefficient, less innovation, shortages/surpluses.

What is the difference between a pure market and a mixed economy?

Pure market: no government intervention. Mixed: government regulates, provides welfare, manages externalities.

Why is Australia considered a mixed economy?

Markets decide most goods/services, but government steps in to provide public goods and address inequality.

What government actions are typical in market capitalist societies?

Provide public goods (roads, schools), regulate markets, address inequality.

List common market issues and their typical solutions.

Overproduction of harmful goods → taxes, regulations. Negative externalities → carbon tax, fines. Underproduction of beneficial goods → subsidies, public schools. Exploitation of workers → minimum wage, workplace laws. High market power → anti-monopoly laws. Recessions → stimulus spending. High debt → financial regulations.

What is a market?

A place (physical or online) where buyers and sellers exchange goods and services.

Name the types of markets mentioned in the notes.

Retail markets, Labour markets, Financial markets, Property/real estate markets, Foreign exchange markets.

State the Law of Demand and the Law of Supply.

Law of Demand: As price rises, quantity demanded falls; as price falls, quantity demanded rises. Law of Supply: As price rises, quantity supplied rises; as price falls, quantity supplied falls.

What are the non-price factors influencing demand and supply?

Demand: income levels, consumer tastes, population size/demographics, substitutes and complements, future expectations. Supply: cost of production, technology, number of suppliers, seasonal/climatic conditions, government policies (taxes, subsidies).

What is equilibrium in a market and how do changes in demand or supply affect it?

Equilibrium is the point where supply equals demand. If demand increases, equilibrium price and quantity rise; if supply increases, equilibrium price falls and quantity rises.