Term
6 Things that Effect the
DEMAND CURVE |
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Definition
1. *Price*
2. Income/Wealth
3. Price of related goods or substitutes 4. Preferences
5. Future expected prices
6. Population |
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Definition
| Individual Decision Making |
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Definition
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Term
| 10 Principles of Economics |
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Definition
1. People Face Trade-Offs
2. The cost of something: what you give up to get it
3. Rational people think on the margin (increments)
4. People respond to incentives
5. Trade CAN make everyone better off 6. Markets are usually a good way to organize economy
7. Government can sometimes improve markets
ALL ABOVE are MICROECONOMICS
ALL BELOW are MACROECONOMICS
8. A country's standard of living depends on productivity
9. Prices rise when too much money is printed
10. MAJOR MACRO NOT NEEDED! |
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Term
10 PRINCIPLES
1. People face trade-offs |
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Definition
| you must give up something to have something else, you can't have everything |
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Term
10 PRINCIPLES
2 The cost of something is what you give up to get it |
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Definition
| involves opportunity cost - what you give up to get something, usually the most valued sacrifice |
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Term
10 PRINCIPLES 2...
positive statements |
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Definition
| fact of description or states how something is |
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Term
10 PRINCIPLES 2...
normative statement |
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Definition
| judgmental description or states how something should be according to morals and ethics |
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Term
10 PRINCIPLES
3 Rational People Think on the Margin |
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Definition
| they think in increments according to what is the best thing to do |
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Term
10 PRINCIPLES
4 People Respond to Incentives |
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Definition
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Term
10 PRINCIPLES
5 Trade CAN Make Everyone Better Off |
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Definition
| trade makes those better as a whole not individually |
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Term
| 10 PRINCIPLES 6 Markets are usually a good way to organize an economy |
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Definition
| capitalism, markets, and incentives provides the goods! |
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Term
| 10 PRINCIPLES 7 Government can sometimes improve markets |
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Definition
pollution is the classic case for a market failure
deals with externality |
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Term
10 PRINCIPLES
7 externality |
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Definition
| when one person's actions has an impact on a bystander |
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Term
| 10 PRINCIPLES 8 A Country's Standard of Living Depends on its Productivity |
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Definition
| can create more of what's in demand without must cost |
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Term
| 10 PRINCIPLES 9 Prices Rise When Too Much Money is Printed |
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Definition
aka inflation
the more quantity of something, the less value able it is |
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Term
10 PRINCIPLES
9 inflation |
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Definition
| the rise in the overall price level |
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Term
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Definition
1. it is wrong to say a causes b because b come after a... some can cause a and b
2. COrrelation isn't the same as causation
3. Fallacy of Composition - things on individual levels aren't the same as things for an entire group |
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Term
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Definition
| it is wrong to say a causes b because b come after a... something can cause a and b |
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Term
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Definition
Correlation isn't the same as causation
just because something happens at the same time doesn't mean they caused each other |
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Term
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Definition
Fallacy of Composition
things on individual levels aren't the same as things for an entire group |
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Term
| PRODUCTION POSSIBILITIES FRONTIER (PPF) |
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Definition
boundary between the set of all goods that you CAN produce, given the scarce # of resources and technology you have
any amount of goods made on or under the PPF line is feasible - any other is not feasible |
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Term
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Definition
| if you produce on your ppf line you are efficient |
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Term
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Definition
the slope of the horizontal good
the mc of the vertical good is the inverse of the slop of the horizontal good I1/slopeI |
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