Macro Economics.txt

    • author "KM"
    • tags "Macro Exam 1"
    • description ""
    • fileName "Macro Economics"
    • freezingBlueDBID -1.0
    • Define scarcity
    • Limited resources for unlimited wants
  1. What does an entrepreneur do
    Combines labor, land, and capital to produce goods
  2. What will the market naturally hit
    Equillibrium point- supply meets demand?
  3. What are economic goods
    Scarce goods from scarce resources
  4. What is an economy
    Total sum of product and service transactions of value between two agents in a region
  5. What are trade offs
    What am I giving up to get something
  6. Define opportunity cost
    • X dollars, nets X goods
    • Low hanging fruit easier than top of the tree, diminished returns from resource precurement
  7. Define marginal cost
    What does it cost to get X more goods
  8. What is the production possibility frontier
    I can produce X of those or X of these, or a smaller quantity of both
  9. Where does productive efficiency fall on a graph
    • Anywhere on curve due to cost of procurement
    • Inside of curve is inefficient
  10. What is the rule of rational choice
    To prosper people alter behavior if the marginal benefit out weighs marginal cost
  11. What are net benefits
    Sum of gain after subtracting loss
  12. What is optimal level
    • Getting the most good for the least
    • Bad?
  13. At What point does the opportunity cost outweigh the op benefit?
    Effect marg benifit vs effect marg cost [E(MB) vs E(MC)]
  14. What is positive incentive
    Increase benefit or reduce cost
  15. What is negative incentive
    Reduce benifit or increase cost
  16. What is specializing/specialization
    • Limit expenditures by limiting diversity thus reducing entrance and production costs
    • Via trading too
  17. What is comparative advantage
    • Producing goods or services at a lower opportunity cost than other goods or services
    • Offered by specialization
  18. What is allocative efficiency
    • Partitioning resources to optimize production and reach production possibility forntier
    • Where marginal cost and marginal benefit meet(?)
  19. What is marginal benefit
    • Your return for your expenditures
    • What you are willing to give for a result
  20. Why does market failure happen
    Economy doesn't efficiently allocate resources independently
  21. Define equality
    How much the economy can produce effeciently vs how it's distributed
  22. Define allocation
    • What good to make
    • How to make it
    • Who will get it
  23. Is correlation equal to causation?
  24. Affect of positive or negative loss?
    It does or doesn't cause problems with aggregation
  25. What is fallacy of composition
    What is true for one doesn't mean true for all
  26. Is it how do people behave or how should people behave
    How DO people behave
  27. What is positive analysis
    • Object, value
    • Free approach
  28. What are normative statements
    Involve subjective judgements
  29. What causes a majority of disagreements?
    Normative prescribes, more than positive describes (?)
  30. What is economics
    Study of using our resources for wants and desires
  31. What forces us to choose?
  32. What is the economic problem
    Scarcity forces us to choose between what wants and needs we have the resources to acquire
  33. What is rational behavior
    People do the best they can, based on values and info, under current and estimated circumstances
  34. What is theory
    Explanation that accounts for known facts or phenomena
  35. Define abstract
    Distance from simplification
  36. Define empiracal
    Fits in a repeatable and meaningful way with the data
  37. Understanding economics requires facts to be selected and arranged in a...
    Conceptual order
  38. What is ceteris paribus
    • Letting everything else be equal
    • Holding everything else constant
    • Allows the abstraction of relevant facts from otherwise complex situations that would require a story to frame the facts
  39. What does human behavior make harder?
  40. Why are generalizations that allow predictions harder in social science?
    Because of human behavioral variables
  41. What behavior is easier to predict and why?
    Group behavior is easier to predict than individual because more general spread of specific personal variable
  42. Define micro
    Decision making of orgs or households
  43. Define macro
    Aggregate (total) economy as they influence society
  44. When is it labor intensive
    Large labor
  45. When is it captial intensive
    Large capital
  46. What is a product market
    Buyers of goods
  47. What is a factor or input market
    People sell their labor, land, capital, and entrep
  48. What is the circular flow?
    Us to Business, Business to Us, etc.
  49. Bads
    Opposite of goods,items we dont desire or want
  50. Consumer soveeignty
    Voting with your money
  51. Command economy
    Goverment plans everything
  52. Market economy
    Markets plans itself
  53. Mixed economy
    Government and market plan the market
  54. Optimal level (correct)
    Getting the most good for the keast bad
  55. Supply and demand
    Price goes up as quantity goes down and vice versa equilibirum acheived by natural market correction
  56. Production efficiency
    When the marginal cost of goods is less than their marginal benefit, efficiency of effort, making too much costs too much without giving the same value
  57. Positive statement
  58. Normative statement
Card Set
Macro Economics.txt
macro 1