on 15-Sep-2019 (Sun)

Question

The study of how households + firms make decisions to interact in markets

Answer

Micro economics:

Question

The study of economy-wide phenomenon e.g.: Inflation, un em p loyment, economic growth

Answer

Macro economics:

Question

What is Economics?

Answer

Economics is the study of ho w so ciet y manages its sca rce resources to satisfy unlimited wants

Question

Basic economic concepts

Answer

Resources: Factors of production such as land, l a bour, and capital.

Scarcity: Society has less to o↵er than people wish to have Society has limited resources, people face tradeo↵s(make decisions)

Economics = Science of choices

Tags

#ECO

Question

Different decision criteria

Answer

Efficiency:

1 Get the most out of so ciet y’s sca rce resources

2 Equity/fairness: Distr i but in g resources fairly among members of society Note: The two goals usually conflict with each other ex.: High income tax (higher marginal rate as income rises)

Tags

#ECO

Question

What is the Purpose: of different decision criteria?

Answer

Equity: T o redistribute wealth from the rich to the poor \

But people will have less incentive to w o r k

– not working to their full potential Underutilization of human resources

- Inefficient use of resources Goals of efficiency and equity clearly conflict with one another

Tags

#ECO

Question

Economists use _____ to describe how an economy works

Answer

models

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#ECO

Question

What is the Scientific approach?

Answer

Phenomenon -> Theory -> Hypotheses -> Observations -> Verification (rejection)

Tags

#ECO

Question

The next best alternative forgone (given up) in order to obtain a certain good or service

or

The OC of using resource s for a certain purpose i s the benefit given up by not using them in the best alternative way.

Answer

Opportunity cost:

Tags

#ECO

Question

______ Examples: You win $10,000 at the lottery . T ake a minute to think what y ou w ould do with the money ... What happens if consumption fuels spending desires b eyond... Tradeoffs

Answer

Opportunity costs