Intro to Econ
The name for the study of the large economy as a whole or economic aggregates.
MACROeconomics
The most desirable alternative given up when you make a choice.
Opportunity cost
Little government involvement in the economy, individuals own resources and answer the three economic questions.
Free Market System
A situation in which the free-market system fails to satisfy society’s wants.
Market Failure
a model that shows alternative ways that an economy can use its scarce resources
production possibilities curve
The name for the study of small economic units, such as individuals, firms, and markets.
MICROeconomics
ALL the alternatives that we give up when we make a choice.
Trade-offs
Economic questions are answered by habits and customs, children work the same jobs parents worked, and a fear of change.
Traditional Economy
The part of the economy that is primarily controlled by the government
The Public Sector
Resources are easily adaptable for producing either good
Constant Opportunity Cost
To have unlimited wants but limited resources.
Scarcity
A phrase used to describe the trade-off between a government's spending on defense and on domestic programs.
Guns and Butter
The government owns all the resources and answers the three economic questions.
Command (Centrally Planned) Economy
Situation that results in a COST for a different person other than the original decision maker.
Negative Externality
As you produce more of any good, the opportunity cost (forgone production of another good) will increase.
Increasing Opportunity Cost
The four factors of production.
Land, Labor, Capital, Entrepreneurship
This must be true about cost and benefit before you will make a decision (Marginal Analysis)
Marginal Benefit > Marginal Cost
Individuals own the resources, the government regulates the production and distribution of many goods/service, and individuals and the government answers the three economic questions.
Mixed Economy
Laws designed to prevent monopolies and promote competition.
Antitrust Laws
What happens to the PPC if there is an increase in physical capital?
It bows outwards
"The rising price of crude oil on world markets will lead to an increase in gas prices" is an example of a positive or a normative statement?
Positive statement (Based on facts. Avoids value judgements)
As you consume more of anything, the additional satisfaction that you receive will eventually start to decrease.
The Law of Diminishing Marginal Utility
The concept that society’s goals will be met as individuals seek their own self-interest (Laissez Faire)
The Invisible Hand
Programs like social security, Medicare, food stamps, free/reduced lunch in schools, etc.
Welfare
Why would you produce at a point inside the PPC?
Inefficiency or Unemployment