Economics 50 terms by ollie mcdadecpb-us-e1.wpmucdn.com/cobblearning.net/dist/9/2928/files/2016/08/Economics...Economics 50 terms by ollie_mcdade scarcity Scarcity is the fundamental

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Economics 50 terms by ollie_mcdade

scarcityScarcity is the fundamental economicproblem of having seemingly unlimitedhuman wants in a world of limitedresources. It states that society hasinsufficient productive resources to fulfillall human wants and needs.

What Is Economics?"Economics is the study of how individualsand groups make decisions with limitedresources as to best satisfy their wants,needs, and desires."

What is Microeconomics?microeconomics deals with economicdecisions made at a low or micro level.

What is Macroeconomics?The study of macroeconomics deals withthe sum total of the decisions made byindividuals in a society or nation such as"how does a change in interest ratesinfluence national savings?

Self-interestSelf-interest is when individuals makedecisions that are in their own bestinterest. Like when you decide to get up inthe morning to go to work and makemoney, or when you pay the grocery storefor food that you would like to eat

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Social interestis when choices are made that benefitsociety as a whole. Imagine one person,who is all knowing and really cares aboutthe people. Every action this benevolentdictator made would be in the socialinterest of the society. The cool thingabout social interest is that it can also beattained by individual decision makersacting in their own self-interest. Thisprocess is what Adam smith called theinvisible hand.

Adam Smithis often touted as the world's first free-market capitalist. While that designation isprobably a bit overstated, Smith's place inhistory as the father of modern economicsand a major proponent of laissez-faireeconomic policies is quite secure. Read onto learn about how this Scottishphilosopher argued against mercantilismto become the father of modern freetrade.

GlobalizationWhen people and organizations aroundthe world begin to connect throughbusiness, economics, and social issues



information revolution (sometimes calledalso the "informational revolution")describes current economic, social andtechnological trends beyond the IndustrialRevolution.

Many competing terms have beenproposed that focus on different aspectsof this societal development. The Britishpolymath crystallographer J. D. Bernalintroduced the term "scientific andtechnical revolution" in his 1939 book TheSocial Function of Science to describe thenew role that science and technology arecoming to play within society

Climate changeis a change in the statistical distribution ofweather patterns when that change lastsfor an extended period of time (i.e.,decades to millions of years). Climatechange may refer to a change in averageweather conditions, or in the timevariation of weather around longer-termaverage conditions (i.e., more or fewerextreme weather events). Climate changeis caused by factors such as bioticprocesses, variations in solar radiationreceived by Earth, plate tectonics, andvolcanic eruptions.

negative balanceis a government budget deficit and debt

MonopolyWhen only one company has control ofthe market

The 5 Economic Needs Food, Shelter, Clothes, Warmth, and Water

scarcity-forces-tradeoffs principle limited resources force people to makechoices and face tradeoffs when theychoose.

marginal benefit what you gain by adding one more unit



economic modela simplified representation of reality thatallows economists to focus on the effectsof one change at a time

tradeoff the exchange of one benefit or advantagefor another that is thought to be better.

invisible handAdam Smith's metaphor to explain how anindividual's pursuit of economic self-interest can promote the well-being ofsociety as a whole

incentivebenefit offered to encourage people to actin a certain way

opportunity costthe value of something that is given up bychoosing one alternative over another

The Seven PrinciplesEconomic ways of thinking includingscarcity, tradeoffs, cost/benefits, andthinking at the margin

Ceteris paribus

A Latin phrase that means while certainvariables change, "all other things remainunchanged."



What is considered a positive relationship? Two variables have a positive relationshipwhen an increase in the value of onevariable is associated with an increase inthe value of another variable It is illustrated by a curve that slopesupward The supply curve is an example of apositive relationship (positive relationshipbetween price and quantity. As the priceincreases the quantity available increases)

variables have a linear relationshiptype of relationship do the variables haveif the curve is a straight line?

variables have a non-linear relationship relationship do the variables have if thecurve is not a straight line

Economic SystemThe method used by a society to produceand distribute goods and services.

Patriotism

The love of one's country; the passion thatinspires a person to serve his or hercountry.



Market EconomyAn economic system where decisionsabout production, price and othereconomic factors are all determined bythe law of supply and demand.

IncentiveAn expectation or reward that encouragespeople to behave in a certain way.

Scarcitywhen there is not enough of something tosatisfy how much everyone wants of it.

Trade-offsthe alternative choices people face inmaking an economic decision

Opportunity Costthe cost of the next best alternativeamong a person's choices-the time,money, or resources that are given up orsacrificed to make the final choice

Three Economic QuestionsWhat goods and services should beproduced? How these goods and services should beproduced? For whom should these goods andservices be produced?

law of supplystates that when prices decrease, quantitysupplied decreases, and when pricesincrease, quantity supplied increases(when the price goes down so does theamount made; when the price goes up sodoes the amount made)



entrepreneursomeone who organizes a businessventure and assumes the risk for it

private propertyproperty owned by individuals orcompanies, not by the government or thepeople as a whole

natural resourcesresources (actual and potential) suppliedby nature

capital resourcesThe tools, equipment, and buildings thatare used to produce goods and services

embargoa government order imposing a tradebarrier; a limit or ban on trade

Factors of productionLand, labor, and capital; the three groupsof resources that are used to make allgoods and services

MacroeconomicsThe study of the performance of thenational economy and the global economy

MicroeconomicsThe study of the choices that individualsand businesses make, the way thesechoices interact in markets, and theinfluence of governments

The Invisible HandThe price mechanism, the rise and fall ofprices that guides our actions in a market.



elasticity of demand for exports a measure of the responsiveness of thequantity demanded of exports when thereis a change in the relative price of exports

inelastic demandquantity is insensitive to a change in price

total revenueTells you what happens to total revenuewhen there is a change in price

Cross elasticity of demandMeasures the responsiveness of thequantity demanded of a product whentheir is a change in price of anotherproduct

XED = % change in quantity demanded ofGood X" ---------------------------------------------------------------- % change in price of good "Y"

Cross Elasticity related to?Any Product related to each other

SubstitutesEcross is a positive coefficient

Complement Ecross is a negative coefficient.

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Economics 50 terms by ollie mcdadecpb-us-e1.wpmucdn.com/cobblearning.net/dist/9/2928/files/2016/08/Economics...Economics 50 terms by ollie_mcdade scarcity Scarcity is the fundamental