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Economics
the study of how individuals, businesses, and society make decisions to allocate limited resources to unlimited wants
Economics assumes people are:
Rational
Self-interested
Respond to Incentives
Microeconomics
the study of decision-making by individuals, businesses, and industries
Ceteris paribus
an assumption stating that all things are held equal
Efficiency
how well resources are used and allocated
Production Efficiency
goods produced at the lowest possible resource cost
Allocative Efficiency
goods and services are what society wants
Equity
resources among people are considered fair
Positive Question
can be easily answered with information or facts available
Normative Question
uses society’s beliefs about what should or should not take place
Opportunity Cost
next best alternative; what you give up to do
Subsidies
give money to industry to stay in business
Note
Flashcard