Unit 1
Define economics
The study of allocation of our limited resources to satisfy our unlimited wants.
List Cell
Capital
Entrepreneurship
Land
Labor
What is the difference between Micro and Macro economics
Micro deals with households and firms
Macro deals with the aggregate economy
What is a market
Anywhere buyers and sellers exchange goods and services
What is opportunnity cost
The highest valued alternative foregone
What is the difference between Egalitarianism and Libertarianism
Egalitarianism- Same standard of living (Equal)
Libertarianism- keep what you earn with low government intervention
What is the differences between goods and services
Good- tangible item with value
Service- intangible action with value
Why does Demand curve slope downward
Substitution effect
Income Effect
Diminishing Marginal Utility
What is the economic assumption
People are motivated by self interest
What are the 3 different market systems
traditional
Hierarchy
Market
Positive vs normative analysis
Positive- how people DO act
Normative- how people SHOULD act
Why is the supply curve sloping upward
Profit effect
Rising Opportunity cost
What is the definition of rationality (Economic thinking)
A) preferences
B) ability to rank those preferences
C) attempt to maximize utility (Satisfaction)
What is a hypothesis
A testable proposition in predicting behavior
List the 3 P's
Price
Profit
Property rights
Price of the related goods
Income
Number of Buyers
Taste
Expectations
How is Econ a social science
It deals with studying human behavior in a world full of scarce resources
What is a theory
An established explanation that accounts for known facts or events
What is the Law of comparative advantage
Total output of a group/ country will be highest where output of each good is produced by the person/ firm/ country with the lowest opportunity cost
List SPENT
Supplier input cost
Price of related goods
Expectations of future prices
Number of Sellers
Taxes
Tampering
Tech