ECON 1110

Social science

Analyze human behaviour

Physical sciences

Electrons, atoms, nonliving etc

Define economics

Study of how people allocate their limited resources to satisfy their unlimited wants. AKA how people make choices

Define resources

Things that have value, used to produce goods and services to satisfy wants.

Define Microeconomics

Study of decision making made by individuals, households and firms. A small part of the economy.

Define Macroeconomcis

Study of behaviour of the entire economy as a whole.

Main examples of macroeconomics

Changes in unemployment, the general price levels and national income.

Is a government changing heath care micro or macro economics?

Micro

Is higher wages due to union strike micro or macro economics?

Micro

Is the rates of inflation micro or macro economics?

Macro

Is economy wide unemployment micro or macro economics?

Macro

is yearly growth of goods and services micro or macro economics?

Macro

What is the first basic economic question?

What and how much will we produce?

Production is based off of-?

Central control or market control number line.

What is the second of the 3 economic questions?

How will we produce the item or service?

What is the third of the 3 economic questions?

For who are we making the product?

What is a price system?

Defines that prices signal to the market what is needed, low price or value itemas will be less focused over higher.

What is Rational Self Interest?

When someone believes that their money or income (such as working overtime) will make them better off.

What is positive vs Negative Incentive?

positive- encourages behaviour

negative- tries to reduce a behaviour

What does ceteris paribus mean?

All things the same. Only one thing at a time.

What are Positive economics?

Economics can be treated and measured.

What is an example of positive economics?

The increase in fuel costs results in an increase in prices at the grocery store.

What is Normative economics?

Focuses on value judgement, opinions, and what a economy ought to be.

What is an example of normative economics?

Canada should put guns on polar bears to reduce defence spending.

On a basic graph what goes on the X axis?

Quantity

On a basic graph what goes on the Y Axis?

$

What is a direct relationship on a graph?

A positive number, positive slope.

What is an inverse relationship on a graph?

Indirect relationship, negative slope.

What is scarcity in economic terms?

When unlimited wants are greater than limited resources.

What is physical capital defined as?

Factories or machines

What is Human capital defined as?

Training and Education

What is entrepreneurship?

Coordination of factors of production

What is scarcity?

Fundamental economic problem of having limited resources to meet unlimited wants and needs.

Define Trade- Off

The act of giving up one benefit in order to gain another, often due to scarcity.

Opportunity Costs

The value of the next-best alternative that is certain to happen when making a decision.

What is a product possibility curve?

Curve showing maximum combinations of two goods that can be produced with the available resources.

What is Increasing Opportunity costs?

Principle of producing more of one good requires giving up increasingly larger amounts of another good.

What are consumption goods?

Goods that satisfy immediate needs and wants such as food and clothing.

What are capital goods?

Goods used to produce other goods and services, such as machinery and tools.

What is an absolute advantage?

The ability of a country to produce more of a good using the same resources as another country.

What is a comparative advantage?

The ability of a country to produce a good at a lower opportunity cost than another country.

What is specialization?

The focus on producing goods or services in which a country or individual has an advantage.

What is economic efficiency?

The optimal allocation of resources to maximize the satisfaction of needs and wants.

What is sustainable development?

Economic growth that meets current needs without compromising future generations ability to meet their needs.

What is resource allocation?

The process of distributing resources among various uses to maximize efficiency.