Econ test 1

Terms mentioned 1.1-1.3 but LOTS of comparative advantage / opportunity cost questions and calculations

What is the study of scarcity and choice?

Economics

What happens when you give up something to get something else?

Trade-off

A resource or for of production is anything that

can be used to produce something else.

All resources that come from nature (timber, wind, fish, petroleum)

Land

Effort of workers is..

Labor

Manufactured goods used to make other goods/services

Capital

Entrepreneurship

Organizing resources for production, taking risks to create new enterprises, and innovating to develop new products and production processes.

What would you call a resource not available in sufficient quantities to satisfy all the various ways a society wants to use it.

A scare resource

What is the study of how individuals, households, and firms make decisions and how they act?

Microeconomics

Person/group of ppl that share their income

Household

Any organization that produces goods or services for sale

Firm

Macroeconomics

overall ups and downs of the economy

4 Factors of production (LLCE)

Land, Labor, Capital, Entrepreneurship

Scarcity

Not enough of it to satisfy all the ways ppl want to use it. (Oil and coal)

Macroeconomics focuses on..

economic aggregates

What are economic aggregates?

Unemployment rate, inflation rate, Gross Domestic Product

Opportunity Cost

Value of the next best alternative that you must give up when you make a particular choice

The forgone opportunity to do homework because you went out, includes a..

opportunity cost

Why is a full scholarship to college not free?

Time spent studying not earning money

Positive economics

Yes and No definitive answers

Normative economics

How the economy SHOULD work

Economic models are good for answering what?

“What if” questions

Model

Simplified representation to better understand a real-life situation

Efficient economy

Only occurs when no way to make anyone better off without making one person worse off.

Technology

Technical means for producing goods and services

Economic growth

Increase in maximum amnt. of goods and services an economy can produce

Production Possibilities curve (PPC)

Trade-offs in an economy that only produces two goods. It shows the maximum quantity of one good that can be produced for each possible quantity of the other good produced.

Other things equal assumption - ceteris paribus

All other relevant factors remain unchanged

Trade

What occurs in a market economy?

Gains from trade come from?

Specialization

Specialization

Each person specializes in a task they are good at.

Comparative Advantage

An individual has this if person’s lowest among the ppl who could produce that good or service.

An individual has an absolute advantage in producing something if…

they can make more of it with a given/set amnt of time and resources

The PPC is good for showing?

Comparative Advantage