Economics Tough MidTerms Vocabs

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15 Terms

1

Why is Economics important?

Helps understand resource allocation, market functions, and decision-making.

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2

Why is Choice at the Margin important?

Helps people make more efficient decisions about the use of factors of production

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3

Why is Ceteris Paribus important?

explains that not everything in an economy can be tested

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4

What is Economic System?

how resources are owned and allocated within the economy

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5

Why is Economic System importance?

shapes the structure of nation economy and the standard of living for the people

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6

What is Short Run?

Planning period where at least one factors of production is fixed

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7

What is Long Run?

Planning period where all factors of production are variable

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8

Describe Circular Flow Model

Constant cycle of exchanging resources between producers and consumers, where producers are also consumers

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9

Why is Circular flow model important?

Helps understand how the economy operates and how they relate to to each other

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10

What is Imperfect Competition? Provide Ex as well

Multiple firms competing where at least one is a price setter, EX Airlines

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11

What is Economies of Scales?

A firm average cost of production decreases as it produces more output

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12

Why is Economies of Scales important?

Allows firms to reduce cost as production expands

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13

what is Law of Diminishing Utility?

At a certain point, the more you do it the less benefit you gain

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14

What is efficient? verbatim

Refers to the allocation of resources, when net benefits of all economic activities are maximized

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15

What is Fixed Factors of Production?

Resources cannot be changed easily in the short run, regardless of production levels

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