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theories, principles, and models are “…”
purposeful simplifications
principles are …
generalizations of tendencies
theories are made under the assumption of…
ceteris paribus
‘ceteris paribus’ means
all other things equal
when a t, p, or m is made under ceteris peribus, what is assumed?
only the considered factors are changing
microeconomics studies
individual decision-making and behavior
macroeconomics studies
growth and changes in the economy as a whole
economics studies
choices made under conditions of scarcity
the economic perspective
1) scarcity and choice, 2) purposeful (rational) behavior, 3) marginal analysis
what is an opportunity cost?
the cost of the next-best item that’s given up by making a choice
positive economics is based on…
facts & cause and effect relationships
normative economics is based on…
subjective, value-based judgements
predictions are inherently examples of ___ economics
normative
the individual’s economizing problem
needing to make choices because economic wants exceed economic means
budget lines
various combinations of products one can purchase with a limited income
all combinations ABOVE the line are…
unattainable
all combinations BELOW or ON the PPC are…
attainable
marginal benefits
the additional benefits of a choice
marginal costs
the additional costs of a choice
economic resources
land, labor, capital, entrepreneurial ability
production possibilities model demonstrates
society’s economizing problem
a full economy must sacrifice ____ to get another because of ____
one good, scarce resources
a straight budget line implies a ____ opportunity cost
constant
a curved PPM line implies an ___ opportunity cost
increasing
the law of increasing opportunity costs
the opportunity cost of producing each unit of one good is greater than the opportunity cost of producing the previous unit
any economic activity should be expanded as long as ___ exceed ___
marginal benefits, marginal costs
resources are fully allocated when MB _ MC
=
unemployment is represented as
points inside the PPM curve
if a society minimizes their present goods, they ___ their future goods
maximize
if a society maximizes their present goods, they ___ their future goods
minimize
scarcity arises because
limited resources, unlimited wants
a production possibilities curve demonstrates
the combinations of two goods that can be produced with all available resources
comparative advantage is
a country specializing in producing the good for which it has the lowest opportunity cost
absolute advantage is
a country producing more of a good or service with the same amount (or fewer) compared to others
marginal analysis compares
marginal benefits and marginal costs
Note 
Flashcard (24)