Vocabulary
Are opportunity costs always related to $?
No
____ Economics uses the tools of economic analysis to describe and explain economic phenomena
- and makes predictions about what will happen under particular circumstances.
Positive Economics
What is Economics
The study of how individuals make choices about how to allocate scarce resources
-in order to satisfy virtually unlimited human wants
-about how individuals interact with one another.
What are opportunity costs?
What you give up in the process of choosing something else.
Which type of economics focuses on identifying cause-and-effect relationships and measuring their size.
Positive Economics
Name 2 things that Economic Analysis relies on?
Careful observation, description, measurement of economic activity, and theory
Rationality
Comparing benefits between two options, then choosing the one that benefits you most.
What do models usually consist of in Economics?
Diagrams or Mathematical formulas.
Gains from Trade
By specializing what we know/do best and trading with people with other specialties, we can both be benefited.
- As long as the exchange is voluntary, then the benefits must outweigh the costs for both of the people involved.
What is Scarcity?
The amount of work, energy, knowledge, and capital available to produce the goods and services people wish to consume is limited.
-implies that every choice we make requires us to give up something to get something else.