Microeconomics Chapter 1 Test- Townsend

Economic way of thinking

The resources you give up to obtain a want or need

What you would be doing if you didn't have to do something else; your next best alternative

Trade-off plus Opportunity Cost

The fact that the additional use/satisfaction of something decreases; for each additional item you obtain, you will not receive as much satisfaction from it

Limited or rare resources; the basic problem in economics

The one thing that is not scarce

If there was no such thing as ___________, there would be no economics

Doing what's in one's own best interest

As long as benefit is greater than or equal to cost, it's good

T he creation of policies to achieve
specific goals is no simple matter

Land, Labor, Capital, Entrepreneurship

Land or anything you can pull from land; one of the 4 resource classifications

Physical or mental work done by HUMANS; one of the 4 resource classifications

Tools and facilities; time fits into this resource; one of the 4 resource classifications

Individual or organization that brought the other factors together

The study of how individuals and nations use scarce resources to satisfy their wants or needs

small units/concepts

big units; world trade; currency exchanges

The three things economists say are a need

Produce more and better goods
and services, or, more simply, develop a higher standard of living.

Provide suitable jobs for all citizens
who are willing and able to work

Achieve the maximum fulfillment
of wants using the available productive resources

Avoid large upswings and downswings
in the general price level; that is, avoid inflation
and deflation

Guarantee that businesses, workers,
and consumers have a high degree of freedom in
their economic activities

Ensure that no group of citizens faces poverty while most others enjoy abundance

Provide for those who are chronically
ill, disabled, laid off, aged, or otherwise unable
to earn minimal levels of income

Seek a reasonable overall balance
with the rest of the world in international trade and
financial transactions

Biased, Loaded Terminology, Correlation vs. Causation, Fallacy of Composition, and Posthoc Ergo Propterhoc Fallacy

Beliefs, attitudes, stances effect choices and views on the matter

The way things are worded in a certain way to pull people towards one side more than the other

Just because something is related does not mean it is the cause

What is the best option for one person; what's good for one may not be good for another; what's true for the individual is not true for the group

After this, therefore because of this fallacy; just because Event A happened before Event B doesn't mean that Event A caused Event B to happen

Fact; a statement that can be measured or proven; focuses on facts and cause-and-effect relationships.

An opinionated statement; incorporates value judgments about what the economy should be like or what particular policy actions should be recommended to achieve a desirable goal

Other things equal assumption; nothing else is changing except the one thing YOU are changing

How one achieves a goal;—courses of action based on economic principles and intended to resolve a specific economic problem or further an economic goal; economists have different views on this and more likely than not, they disagree on it

aka theory; The process of deriving theories and principles; taking facts and proving them; economists have to agree

Data given; economists want/have to agree on this

Moving from fact to theory

Moving from theory back to facts

State the goal, determine policy options, then implement and evaluate the policy that was selected

Make a clear statement of the economic goal

Formulate alternative policies designed to achieve the goal and determine the possible effects of each policy. This requires a detailed assessment of the economic impact, benefits, costs, and political feasibility of the alternative policies

After implementing the policy, we need to evaluate how well it worked. Only through unbiased evaluation can we improve on economic policy