ECON EXAM #1

• 1: What, and how much to produce
• 2: How to produce it
• 3: For whom to produce

• Means the goods avaliable are too few to satisfy indivuals desires.
• constantly changing
• quantity of goods,services and usable resources depends on technology and human action.

method of reasoning in which one deduces a theory based on a set of almost self evident principles

method of reasoning in which one develops general principles by looking for patterns in data

Combination of deduction and induction

additional cost over and above costs all ready incured

additional bebefit above and beyond what has already accrued

costs that have already been incurred and cannot be recovered

• if marginal benefits exceed marginal costs do it
• MB>MC= do it
• if marginal costs exceed marginal benefits don't do it
• MC>MB= don't do it

• the benefit foregone of the next best alternative to the activity you have chosen
• basis of cost/benefit economic reasoning

are mechanisms that ration scarce goods

Is an economic force that is relativly free rein by society to work through the market

a framework that places the generalized insights of the theory in a more specif contextual setting

a commonly held economic insight stated as law or general assumption

a branch of economics that studies the economy through controlled labratory experiments

Naturally ocurring events that aproximate a controlled experiment where something changed in one place but has not changed somewhere else

propositions that are logically true based on the assumptions in a model

policy rules that conclude that a particular course of action is preferable

a market economy through the price mechanism will tend to allocate resources efficiently

means achieving a goal as cheaply as possible

is the study of indivual choice, and how that choice is influenced by economic forces

is the study of the economy as whole

are laws, common practices, and organizations in a society that affect the economy

are actions or inactions taken by gov to influence economic actions

keeps value judgements seperate from analysis

reflects the analyst's views of how things should be

study of what is

study of what should be

Using the knowledge of positive economics to acheive the goals determined in normative economics

lists a choices oppurtuniy cost by summarizing what alternatine outputs you can achieve with your inputs

result of activity

what you put in production process to achieve an output

• a curve measuring the maxium combination of outputs that can be obtained from a given number of inputs
• graphical representation of the oppurtunity cost concept

states that opportunity costs increase the more you concentrate on the activity

ability to be better suited to the production of one good than another

achieving as much output as possible from a given amouont of inputs or resources

allows consumption outside of PPC

an economic policy of leaving coordination of indivuals actions to the market

the relocation of production once done in the United States to foreign countries

the increasing integration of economies,cultures, and institutions across the world

wages of equal workers in one country will not differ significantlyfrom the wages of workers in another institutionally similar country

economic system based on pvt property and market, indivuals decide what, how and for whom to produce

economic system based on indivuals goodwill to others, not self interest,society decides what, how and for whom to produce

economic system based on market ownership of means of production resides with small group of indivuals called capitalist's

economic system where tradition rules

economic system where gov determines what, how, and for whomby doling out rights to undertake economic activity

Capitalism

households supply labor/other factors to production and get paid

business produce goods and services and sell to households, other business and Gov

pvt production units in society

ability to organize and get something done

85%

consumers wishes determine whats produced

• business with one owner
• 71% U.S. business
• unlimited liability

• business with two or more owners
• unlimited liability

business that are treated as a person and are legally owned by stockholders, not liabile for actions of corporate personhood

proceeds from sale of stock

stockholders liability limited to amount invested

assets that acquire value from an obligation of someone else to pay

• B2B-bus to bus
• B2C-bus to consumer
• C2B-consumer to bus
• C2C-consumer to consumer

• business
• households
• Gov

group of indivuals living together and making joint decisions

• actor-collecting taxes and spending
• referee-sets rules that determine relationship between bus and households

• provides stable institutions and rules
• promotes effective and workable competition
• corrects for externalities
• ensuring economic stability and growth
• providing public goods
• adjusting for undesirable market results

• Gurantees contracts
• punishes law breakers

• promotes competition
• prevents monopolies

ability of indivuals and firms currently in business to prevent others from entering same kind of business

• effect of a decision on a third party not taken into account by decision maker
• canbe positive/negative

• dealing with macroeconomic externalities
• externalities that affect the levels of unemployment, inflationor growth in economy as a whole

good that if supplied to one must be supplied to all and whose consumption by one does not prevent consumption by others

good that when consumed can not be consumed by another

person who gets benefit but does not contribute to paying cost

• demerit goods-goods and activities gov believes are bad for people even though they may chose to do them
• merit goods-goods or activities gov believes are good for people evn if they may chose not to do them
• market failures-situations where the market does not lead to desired result

corps with substantial operations in both prod/sales in more than one country

multinational ,international finacial institution that works with developing countries to secure low interest loans to foster economic growth

multinational, international, finacial institution that is concerned primarily with monetary issues. deals with international finacial issues

works to reduce trade barriers