ECN 2010 exam 1 review| Ques ons and answers |
Updated New
economics
the study of ways people organize and manage resources whether they are natural, ar ficial,
etc.
scarcity
Limited quan es of resources to meet unlimited wants
efficiency
society is ge ng the maximum benefits from its scarce resources
opportunity cost
whatever must be given up to obtain some item (ex: watching a movie instead of studying)
marginal change
a small incremental adjustment to a plan of ac on
market economy
Economic decisions are made by firms or households
invisible hand
A phrase coined by Adam Smith to describe the process that turns self-directed gain into social
and economic benefits for all
market failure
a situa on in which the market on its own fails to produce in an efficient alloca on of resources
externality
the impact of one person's ac ons on the well-being of a bystander (ex: pollu on from a good
that creates health problems)
market power
refers to the ability of a single person or firm to unduly influence market prices
, produc vity
the amount of goods and services produced by each unit of labor input
infla on
an increase in the overall level of prices in the economy
business cycle
Fluctua ons in economic ac vity, such as employment and produc on
economists use the theory of
observa on
produc on possibili es fron er
a graph that shows the combina ons of output that the economy can possibly produce given
the available factors of produc on and the available produc on technology
microeconomics
the study of how households and firms make decisions and how they interact in markets
posi ve statement
statement which describes the world as it is (descrip ve)
norma ve statement
statement which describes how the world should be (prescrip ve)
absolute advantage
the ability to produce a good using fewer inputs than another producer
compara ve advantage
the ability to produce a good at a lower opportunity cost than another producer
Imports
goods produced abroad and sold domes cally
Exports
goods and services sold to other countries
3 principles of the ppf highlights
Updated New
economics
the study of ways people organize and manage resources whether they are natural, ar ficial,
etc.
scarcity
Limited quan es of resources to meet unlimited wants
efficiency
society is ge ng the maximum benefits from its scarce resources
opportunity cost
whatever must be given up to obtain some item (ex: watching a movie instead of studying)
marginal change
a small incremental adjustment to a plan of ac on
market economy
Economic decisions are made by firms or households
invisible hand
A phrase coined by Adam Smith to describe the process that turns self-directed gain into social
and economic benefits for all
market failure
a situa on in which the market on its own fails to produce in an efficient alloca on of resources
externality
the impact of one person's ac ons on the well-being of a bystander (ex: pollu on from a good
that creates health problems)
market power
refers to the ability of a single person or firm to unduly influence market prices
, produc vity
the amount of goods and services produced by each unit of labor input
infla on
an increase in the overall level of prices in the economy
business cycle
Fluctua ons in economic ac vity, such as employment and produc on
economists use the theory of
observa on
produc on possibili es fron er
a graph that shows the combina ons of output that the economy can possibly produce given
the available factors of produc on and the available produc on technology
microeconomics
the study of how households and firms make decisions and how they interact in markets
posi ve statement
statement which describes the world as it is (descrip ve)
norma ve statement
statement which describes how the world should be (prescrip ve)
absolute advantage
the ability to produce a good using fewer inputs than another producer
compara ve advantage
the ability to produce a good at a lower opportunity cost than another producer
Imports
goods produced abroad and sold domes cally
Exports
goods and services sold to other countries
3 principles of the ppf highlights
