Macroecon Chapter 1
Shows that if all resources are fully and efficiently utilized, more of one good can be produced only be producing less of another good
PPF
Occurs when production is in accordance with consumer preferences
allocative efficiency
The reduction in economic surplus resulting from not being in competitive equilibrium
deadweight loss
The study of the choices people make to attain their goals, given their scarce resources
economics
The fair distribution of economic benefits
equity
Goods and services bought domestically but produced in other countries
imports
What would cause both the equilibrium price and equilibrium quantity to increase?
increase in income
Covers the study of topics such as inflation or unemployment
macroeconomics
How households and firms make choices, how they interact in markets, and how the government attempts to influence their choices
micreconomics
Subjective statements rather than objective statements
normative
Is concerned with "what ought to be"
normative analysis
Reasons for drawing incorrect conclusions about cause and effect include
omitted variable, reverse casuality
The highest valued alternative that must be given up to engage in an activity
opportunity cost
When the federal government crafts environmental policies that make it less expensive for firms to follow green initiatives
policies are consistent with economic incentives
Objective statements that can be tested, amended or rejected by referring to the available evidence
positive
Is concerned with "what is"
positive analysis
Measures the costs and benefits of different courses of action
positive analysis
Rent control is an example of a
price ceiling
Occurs when a good or service is produced at the lowest possible cost
productive efficiency
One of the basic facts of life is that people must make choices as they try to attain their goals. This unavoidable fact comes from a reality an economist calls
scarcity
In October 2005, USA banned importation of beluga caviar. What happened to market for caviar in US?
supply shifted left
3 fundamental questions about goods and services
what, how, who
