carina foundations extra

Efficiency

refers to making the best possible use of scarce resources to avoid resource waste

allocative efficiency

scarce resources are used to produce good/services that mostly satisfy society's wants and needs. Is used to determine the appropriateness of economic actions to also minimize resource waste

Equity

the idea of being fair or just - fairness depends on peoples beliefs or value judgements (normative concept)

Equality

the state of being equal with respect to something (positive concept)

what is economic well-being?

refers to the levels of prosperity, economic satisfaction and standards of living among the members of a society

what are examples of economic well-being?

- security in reference to income and wealth - having a job and housing

- the ability to have a satisfactory quality of life with factors such as healthcare, education, personal security, social connection and environmental quality

- the ability to pursue one's goals, work productively and to develop one's potential

change

when something becomes different over time

Interdependance

refers to the idea that economic decision makers interact with and depend on each other

intervention (in economics)

usually government intervention, which is when the government becomes involved with the workings of markets to help correct for the markets deficiencies.

resources

the inputs used to produce and services wanted by people. also known as the factors of production

sustainable resource use

means that resources are used at a rate that allows them to reproduce themselves, so that they do not become degraded or depleted. refers to the preservation of the environment over time

human capital

refers to the skills, abilities and knowledge of workers that make them more productive

free good

A good that is not scarce and therefore has no opportunity cost

economic good

a good that is scarce - either naturally occurring scarce or is made out of scarce resources

resource allocation

refers to assigning available resources, or factors of production, to specific uses chosen among many possible alternatives

distribution of income

the way in which income is allocated among families, individuals, or other designated groups in the economy

public sector

refers to the parts of the economy that are under the ownership of the government

private sector

refers to the parts of the economy that are under the ownership of private individuals or grousp of individuals like consumers (hosueholds), firms (businesses) and resources owners and NGOs

Rationing

a method used to make resource allocation and output/income distribution decisions

What is price rationing?

economic decisions are made based on the prices of goods/services and resources that have been determined in the markets

what kind of rationing do free economies use?

price rationing

What is non-price rationing?

all economic decisions are made by the use of methods that have nothing to do with prices determined in markets

what kind of rationing do planned economies use?

non-price rationing

model

a simplified representation of something in the real world, only presents the important aspects

what are factors that lead to the outward shirt of a PPC?

- increases in the quantity of resources (factors of production) in the economy

- improvements in the quality of resources (more educated labor)

- technological improvements

what is the difference between actual growth and growth in production possibilities?

actual growth = movement from one point inside the PPC to another point closer to the PPC

growth in production possibilities = involves an outward shirt of the PPC

what do households own?

factors of production

household expenditures

The payments that households make to buy goods and services

costs of production

Payments that firms make to buy factors of production

revenue

payments firms receive for selling goods/services

how is saving a form of a leakage in the economy?

when households save a part of their income, that income is not being spent on goods and services

imports

goods and services produced in other countries and purchased by domestic buyers

exports

good and services produced domestically and purchased by foreigners

open economy

when a country has international trade with imports and exports

what happens to the size of the circular flow of income model if injections are larger than leakages?

size increases

what happens to the size of the circular flow of income model if leakages are larger than injections?

size decreases

assumption

a statement that is supposed to be true for the purposes of building the hypothesis

what is the translation of ceteris paribus?

other things equal

meaning behind ceteris paribus?

that all other things are assumed to be constant or unchanging

why is ceteris paribus used by economists?

allows them to construct hypotheses, models and theories -> isolate and study the effects of one variable at a time

empirical evidence

refers to real-world information, observations and data, aquired through our sense and experiences.

theory

A hypothesis that has been tested with a significant amount of data

Refutation

to contradict, dissaprove or prove that something is false

refutation is also known as?

falsifiability

value judgement

are opinions - subjective judgements rather than factual statements