Chapter I: What Is Economics (que Es Economia)

to have value an item must be – scarce and have utility
Manufactured Good – A product that has been produced by machines and/or human labor.
Average cost pricing – occurs when regulators set a monopoly's price equal to its average cost to prevent the firm from incurring a loss.
Advantages of a Free Market Economy – 1. Wide variety of resources

2. Firms will respond to what the consumers want

3. Profit motive encourages innovation and efficiency

4. No Tax on income or wealth

The scarcity principle – No free lunch
Factors of Production – Land, Labor, Capital, Entrepreneurship
what is opportunity cost – the benefit foregone of the next best alternative usually expressed in the form of utility
Subprime lenders include:
Market – the place where consumers and businesses interact (buy/sell goods or services)
recession – a decline in economic growth for 6 or more months in a row
wealth – term for the value of all the things that people own
Concurrent – Industrial production, investments, consumption, exports
multiplier – the ratio of the total change in real GDP caused by an autonomous change in aggregate spending to the size of that autonomous change.
The only pure economic system that really exists is a ______ economy. – traditional
Subprime lenders include:
Opportunity Cost – Buying the same item will not always cost the same amount
collusion – an illegal agreement among firms to divide the market, set prices, or limit production
Positive Economics – The study of what is, and how the economy works.
price system – arrangement that uses monetary prices as messages to facilitate exchanges between buyers and sellers

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