economics chapter 1

what is economics?

the study of how people choose to use their limited resources to satisfy their unlimited wants

what is economy?

a system used to mange limited resourse for the production, distribution, and consumption of goods and services

what is CBA or Cost Benefits Analysis?

a way to compare the cost of an action with the benefits of that action; if the action is worth taking

what is a market?

an arrangement that brings buyers and sellers together to do business with each other

what is it that makes resources limited?

because of the goods and service

explain marginal thinking.

decision-making tool to help them maximize their profits

explain the no free lunch principle (TINSTAAFL).

expresses the idea that even id something seems like it is free, there is always a cost, no matter how indirect or hidden

how dose positive economics work?

it doesn't have to be correct but it has to be test to proved or disproved

what is the definition of an economic enigma? give an example.

its a puzzle or riddle that maybe explained through economic analysis Ex: why does popcorn cost more money then at the grocery store

what is microeconomics? give an example.

its the study of the economy at the level of individuals, households, and business Ex:small

what is macroeconomics? give an example.

its the study of the working of the economy as a whole Ex:big `

how does normative economics work?

its your opinion based, so they cannot be proved or disproved

what are examples of resources?

land, labor, and capital

explain the difference between marginal gain and marginal cost.

marginal benefit is the gain you receive for doing anything. marginal cost is the additional cost you incur to produce one more unit.

how are scarcity and shortages different? give an example.

scarcity reefers to the fact that for any resource, theres a finite number of whatever it is relative to the aggregate wants and desires of society as a whole. shortages refers to a situation in which the price of something is made to be artificially low, so that amount demanded is much greater than the amount supplied. Ex: oil, water, and land

what is a incentive? give an example.

something that motivate a person to take a particular course of action. Ex:award

define scarcity?

the condition that results because people have limited resources but unlimited wants

define tradeoffs?

the exchange of one benefit or advantage for another that is thought to be better

what are the cost in a CBA.

1.no time for a good breakfast 2.no long morning showers 3.no study time for test before school 4.less time to dress 5.more likely to be late for class

what are the benefits in a CBA.

1.pleasure of sleeping longer 2.lower water bill 3.may do better on test if well rested 4.less likely to fall asleep in class

what are the 7 basic economic principle?

1.scarcity forces tradeoff 2.cost vs. benefits 3.thinking at the margin 4. incentive matters 5. trade makes people better off 6. markets coordinate trade 7. future consequences count

who is Adam smith and what famous book did he write?

Adam smith is an economist and philosopher, he wrote the wealth of nation