Econ401 Chapter 1 – Flashcards
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Unlimited wants exceeds the limited resources available
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Scarcity
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every choice involves an opportunity cost
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scarcity is central to the study of economics because it implies
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greatest valued trade off
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opportunity cost
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rational
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economists assume that consumers are ______
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extra
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marginal means
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marginal benefit equals marginal cost
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an optimal decision occurs when
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what goods will be produced, how will they be produced, and who will receive the goods
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three economic questions that every society must answer are
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government
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centrally planned economies allocate resources based on decisions by the _________
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households and firms
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market economies allocate resources based on decisions made by
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a good or service produced at the lowest possible cost
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productive efficiency
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every good or service is produced up to the point where marginal benefit is equal to marginal cost
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allocative efficiency
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lack of economic incentives
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underlying reason that centrally planned economies have been less efficient is _______
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the fair distribution of economic benefits
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equity is
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analysis concerned with what is
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positive analysis
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is concerned with what ought to be
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normative analysis
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examines individual markets
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microeconomics
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examines the economy as a whole
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macroeconomics
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increasing the production of a good requires larger and larger decreased in the production of another good
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increasing marginal opportunity costs means
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production possibilities frontier - shows the trade-offs between two different products
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PPF
