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34 Cards in this Set
- Front
- Back
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Students Tasks and responsibilities
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1. Understand the material. 2. Record that understanding. 3. Know what you understand
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Levels of understanding |
1. Recognition 2. Description 3. Mechanics 4. Implications |
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Alfred Marshall Definition of Economics |
Economics is the study of mankind in the ordinary business of life. |
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Mankiw definition of economics |
Economics is the study of how society mages its scarce resources |
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Resource |
anything that helps you obtain or produce things that you want |
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trade off |
choice to do one thing is a choice to not do something else |
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Opportunity cost |
what you gave up to make a choice |
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Economics third definition |
The study of choices made in the face of scarcity or study of choices where there is opportunity cost |
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Technology |
Recipe book for production. All known ways to produce |
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Scientific Method in Economics |
1. Observation- Select a topic 2. Construct a theory- simplify it twice end result should be a model for your theory 3. Observation 2- test your theory and get your hypothesis or educated guess... if then statements |
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Micro vs Macro |
Micro is localized macro large scale economics |
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Production possibilites curve |
shows all combos of goods that can be produced using resources and technology |
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Feasible |
can it be done? falls under the line |
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Efficient |
Getting most out of stuff that you can If bellow line it is inefficient |
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Positive |
How the world really is |
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Normative |
what you want it to be not necessarily how it really is. |
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Basic Economic questions in every society |
1.What to produce 2. How to do it 3. Who gets the goods |
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Economic system |
laws, customs, governing bodies |
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Types of Economic systems- these answer basic economic questions |
1.Traditional Economy 2. Command Economy 3. Market Economy 4. Mixed Economy |
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Traditional Economy |
Gets its answers from tradition. pros - easy to run cons - change is difficult |
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Command economy |
answers from authority pros- responds to change cons - modern economy to hard to mage by one person |
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market economy |
answers from independent decisions made by everyone pros it works cons- outcomes can be ugly |
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mixed economy |
Blend of all three. Reality is all countries are a mixed economy |
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Demand |
curve that shows quantity people are willing to buy at one particular price in a given time period slopes down |
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Quantity demanded |
is the amount people are willing to but at one particular price |
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why demand slopes down- income effect |
if price drops money goes farther |
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why demand slopes down- Substitution effect |
if price falls the product is better bargain |
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Demand shifters |
Price of related goods( compliments and substitutes) 2. Income demand goes right if income goes up you buy more 3. Tastes and preferences- new info etc. |
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Substitues |
If you buy this demand for something else goes down |
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Compliments |
buy this demand for something else goes up |
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Supply |
Same as demand but sell. It slopes up |
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Supply shifters |
input prices increase profit per unit goes down and supply goes left |
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Equilibrium price |
price that is where supply and demand cross |
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Equilibrium quantity |
quantity where supply and demand meet |
