Flashcards
The Basics
Flashcards do conjunto (14)
- 1ScarcityIs the situation in which unlimited wants exceed the limited resources available to fulfill those wants.
- 2'People are rational'Refers to the assumption that people can weigh the benefits and costs of each action and then choose an actin only if the benefits are expected to outweigh the costs.
- 3'People respond to incentives'Something that motivates an individual to perform an action. Usually predictable.
Can also refer to opinions being swayed by economic incentives - 4'Optimal' decisionsMost decisions aren't all or nothing- they involve doing more or less. Optimal decisions involve continuing an activity until the costs outweigh the benefits.
- 5EfficiencySociety getting the most from scarce resources.
- 6EquityDistributing economic prosperity fairly among the members of society.
- 7Opportunity CostShows the highest valued alternatives that must be given up to engage in an activity.
- 8Marginal benefitsFROM ONE EXTRA UNIT: Change depending on circumstances. It is basically how important that action is to you at that point in time and how much you will gain from it. e.g. The offer of water after after a race vs water when you have just had a bottle.
- 9What are the two main categories participating in the market?Households and Firms
- 10How to explain the opportunity cost relationship using reciprocals.An expression or function so related to another that their product is unity; the quantity obtained by dividing the number one by a given quantity. e.g. 1 car or 15 wheat = 1/15.
- 11Highest and lowest opportunity cost.The most lost (highest) or gained (lowest) but doing a trade-off.
- 12What can be included in an opportunity cost?The value of the exercise and the time spent doing it.
- 13What is economics?About people and how we operate in the world we live in.
How society manages scarce resources. - 14What is Microeconomics?A focus on the choices and decisions made by individuals. Overall, the study of how people use limited resources to meet unlimited wants.