Eco exam 1

  1. Economics
    Study of how individuals + societies choose to use the scarce resources that nature and previous generations have provided
  2. Microeconomics
    Examines the functioning of individual industries and the behavior of individual decision making units- that is, firms + households.
  3. Macroeconomics
    examines eco behavior of aggregates- income, employment, output, and so on- on a national scale
  4. opportunity cost
    best alternative that we forgo, or give up, when we make a choice or decision.
  5. descriptive economics
    compilation of data that describe phenomenom and facts
  6. Normative economics
    analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe courses of action.
  7. ceteris paribus, or all else equal
    device used to analyze the relationship between two variables while the value of other variables are held unchanged
  8. capital
    things that are produed and then used in the production of other goods and services
  9. theory of comparative advantage
    ricardos theory that specialization and free trade will benifet all tradng parties, even those that may be "absolutely" more efficient producers
  10. comparative advantage
    producer can produce product at a lower opportunity cost
  11. production possibility frontier (PPF)
    A graph that shows all the combonations of goods and services that can be produced if all of societies resources are used efficiently
  12. command economy
    central government either directly or indirectly sets output targets, incomes, and prices
  13. laissez-faire economy
    individual peole and firms pursue their own self-interst without any central direction or regulation
  14. circular flow
    • supply--->demand ON THE INSIDE
    • Payment ON THE OUTSIDE
  15. LOD
    af price falls, quantity demanded rises
  16. Profit
Card Set
Eco exam 1