Micro- Chapter 1 – Flashcards
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Economics assumes that human behavior reflects "___ self interest"
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rational
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An entrepreneur:
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-takes the risk of earning profits or suffering losses from owning an enterprise -innovates -makes strategic business decisions that set the course of an enterprise
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capital goods
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all manufactured aids used in producing consumer goods and services
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What enables society to product more goods with current resources?
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technology
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What is the discipline of economics concerned with individual units such as households
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Micro
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Specializing and participating in international trade allows an economy to:
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-increase the quantities of capital and consumer goods available to society -circumvent the output limits imposed by its own production possibilities curve
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A production possibilities curve implies the attainable combination:
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of many goods that can be produced given a specific set of resources
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All natural, human, and manufactured goods that go into the production of goods and services are considered society's ____economic resources
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scarce
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Which combinations are attainable given a consumer's budget line
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-combinations that fall inside the budget line -combinations that fall on the budget line -combinations on the midpoint of the budget line -a combination that involves the entire consumption of one good and zero consumption of the other good
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Advances in production technology enable a society to produce
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more goods with current or less resources
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ceteris paribus
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-other things equal assumption -factors other than those being considered in a particular analysis do not change
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opportunity cost
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...
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How do capital goods differ from consumer goods?
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-consumer goods satisfy wants directly -capital goods satisfy consumer wants indirectly through the production of consumer goods
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What consists of the physical actions and mental activities that people contribute to the production of goods and services?
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labor
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Combinations of output that fall inside the production possibilities curve represent
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-less total output in an economy -goods that are attainable -inefficient use of resources
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Production possibilities curve
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The attainable combination of two goods that can be produced given a specific set of resources
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In macroeconomics, an _____ is a collection of specific economic units treated as if they were one unit
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aggregate
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Why is it in our self-interest to economize or pick and choose goods and services that maximize our satisfaction?
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Because of our limited incomes conflicting with our insatiable wants for goods and services
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A decrease in income will shift the budget line to the
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left
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The net result of increased quantities of the factors of production is
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-expanded potential output -economic growth
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____ economics focuses on facts and cause and effect relationships.
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positive
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A decrease in income shifts a consumer's budget line to the
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left
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Straight-line budget constraint
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exemplifies constant opportunity cost *budget
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An increase in ___ will shift the budget line to the right
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income
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Positive economic analysis
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concerns what is
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normative economic analysis
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embodies subjective feelings about what ought to be
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Economic term that means incremental changes or additional changes is
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marginal
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Statements about economic behavior or the economy that enables prediction of the probable effects of certain actions is known as
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-economic theory -economic principle
