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Economics
Study of how to best fulfill our unlimited wants with our limited or scarce resources.
Macroeconomics
The study of national and international economic questions and concerns. How do governments decide about their budgets, dealing with inflation, unemployment
Microeconomics
Study of individual economic concerns and questions.
How do individuals decide what to purchase or what action to take?
How do firms decide how much to produce and at what price to sell?
Marginal Benefit
The additional satisfaction or utility gained from consuming one more unit of a good or service.
Marginal Cost
The additional cost of producing or consuming one more unit of a good or service.
Sunk Costs
costs which have been already spent and cannot be received
Sunk Cost Example
If you paid $20 for a movie but hate it halfway through, the $20 is a ——-don’t stay just because you already paid.
Economic Model
is a simplified version of reality used to test or show a theory. It uses graphs, equations, or assumptions to make the theory easier to understand or predict outcomes.
Economic Model Example
A supply and demand graph is a model that shows how prices and quantities interact in a market.
Economic Theory
is a general explanation of how part of the economy works. It’s like a big idea based on logic, observations, and data.
Economic Theory Example
The law of demand (when price goes up, quantity demanded goes down)
let them go
How should we think about Sunk costs?
Utility
is the satisfaction or happiness a person gets from consuming a good or service.
Utillity
Eating a slice of pizza making a customer feel good
Markets
A collection of buyers and sellers. The interaction of these individuals determines the prices for a particular product along with the amount sold
Local markets
where people in a specific town, city, or region buy and sell things — often in person.
buyers, sellers
Efficient markets should have many —— AND many ——-
Opportunity Cost
The foregone alternative that you have to give up in order to take an action.
Opportunity Cost Example
coming to class costs time which you could spend sleeping
Ceteris Paribus
is a Latin phrase that means "all other things being equal" or "holding other factors constant."
It’s used in economics when you want to focus on the effect of one thing, while assuming that everything else stays the same.
Efficiency
getting the most output from the least input.
Efficiency Example
Imagine a bakery that uses its resources (flour, labor, ovens) in the most efficient way, producing the maximum number of cakes with the least waste or cost.
Equity
making sure everyone has a fair share, even if it means not everyone gets the same amount.
Equity Example
Imagine the government provides more support (like food assistance) to low-income families to ensure they have enough resources.
To think at the margin
means to make decisions by considering the additional (marginal) benefits and costs of doing just a little more or a little less of something, rather than looking at the total or overall situation.
land
labor
capital
technology
WHAT ARE THE ONLY THINGS THAT LEAD TO LONG RUN GROWTH IN AN ECONOMY?
THESE ARE THE SAME THINGS THAT SHIFT THE PPF AWAY FROM THE ORIGIN!