Flashcards: Fundamentals of Economics and Resource Tradeoffs — 22 cards

Economics — definition?

Study of resource management in society.

Microeconomics — focus?

Decisions of households and firms.

Macroeconomics — focus?

Economy-wide phenomena like growth and unemployment.

Decision tradeoffs — reason?

Resources are limited, so sacrifices are necessary.

Opportunity cost — example?

Wages foregone when attending college.

Rational decision-making — basis?

Comparing marginal benefits and costs.

Incentives — effect?

Motivate predictable behavioral responses.

Models — purpose?

Simplify reality to analyze economic principles.

PPF — displays?

Maximum production combinations of two goods.

PPF slope — indicates?

Opportunity cost of one good in terms of the other.

Points on PPF — meaning?

Efficient and fully utilizing resources.

Points under PPF — meaning?

Underutilization or unemployment of resources.

Points above PPF — meaning?

Unattainable with current resources and tech.

Economic growth — effect?

Outward shift of the PPF.

Increasing opportunity cost — shape?

Bow-shaped or convex PPF.

Points on, under, above PPF — difference?

On: efficient; under: inefficient; above: impossible.

Scarcity — role?

Necessitates choices and tradeoffs.

Resource allocation — process?

Distributing limited resources among uses.

Tradeoff — definition?

Choosing one thing involves sacrificing another.

Labor requirement per good — metric?

Hours needed to produce one unit.

Feasible point — meaning?

On or inside the PPF, achievable with resources.

Unattainable point — meaning?

Outside the current resource limits.