Module 1: The Study Of Economics Test Questions – Flashcards
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Economics
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The study of scarcity and choice
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Individual choice
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Choices made by individuals about what to do and what not to do
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Economy
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Coordinates choices about production and distribution of goods and services to the people who want them
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Market economy
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Decisions made by many firms and individuals
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Command economy
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Industry is publicly owned and there is a central authority making production and consumption decisions
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Property rights
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Establish ownership and grant individuals the right to trade goods and services
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Marginal benefit
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The gain from doing something one more time
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Resource
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Anything that can be used to produce something else (land, labor, capital, and entrepreneurship)
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Land
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All resources that come from nature
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Labor
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Effort of the workers
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Capital
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Manufactured goods used to make other goods and services
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Entrepreneurship
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Entrepreneurs taking risks and innovating
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Scarcity
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Not enough to satisfy wants and needs
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Opportunity cost
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value of what is given up when a choice is made
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Microeconomics
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How individuals make decisions and how these decisions interact
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Macroeconomics
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Bigger picture- focuses on overall ups and downs of economy
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Economic aggregates
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Economic measures such as unemployment rate, inflation rate, GDP- that summarize data across different markets
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Positive economics
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Answer questions about the way the world works and have definitive right and wrong answers
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Normative economics
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Involves saying how the world should work
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Incentives
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Rewards or punishments that motivate particular choices
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Marginal Analysis
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Study of costs and benefits of doing a little bit more of an activity versus a little bit less
