Podcast
Questions and Answers
What is the primary focus of economics?
What is the primary focus of economics?
- Environmental concerns
- Human decision-making in the face of scarcity (correct)
- Distribution of wealth
- Government regulations
Consumption is the smallest component of GDP.
Consumption is the smallest component of GDP.
False (B)
What is the formula for calculating GDP?
What is the formula for calculating GDP?
GDP = C + I + G + (e - I)
The economic term used to describe the amount of satisfaction from consumption is called _____
The economic term used to describe the amount of satisfaction from consumption is called _____
Match the following economic terms with their descriptions:
Match the following economic terms with their descriptions:
Flashcards
Economics
Economics
The study of how humans make decisions in the face of scarcity.
Scarcity
Scarcity
Human wants for goods and services exceed available resources, which are finite.
GDP
GDP
Gross Domestic Product; total economic output measured as: C + I + G + (e - I).
Opportunity Costs
Opportunity Costs
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Marginal Thinking
Marginal Thinking
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Study Notes
Economics Fundamentals
- Economics is the study of how individuals make decisions when faced with limited resources (scarcity).
- Scarcity arises from unlimited human wants for goods and services, while resources are finite.
- Economies of scale involve decreased costs as production increases.
- Households sell labor, and businesses buy it.
- Command economies are centrally planned, with rules and goals set from the top.
- Market economies rely on free interaction between buyers and sellers.
- Five foundational economic principles are incentives, tradeoffs, opportunity costs, marginal thinking, and the creation of value through trade.
- Tradeoffs represent the inherent limitations of choices; choosing one action prevents another.
- GDP (Gross Domestic Product) is calculated as C + I + G + (X-M), where C = consumption, I = investment, G = government spending, and (X-M) = net exports (exports minus imports).
- Consumption contributes significantly to GDP.
- A trade surplus increases GDP, while a trade deficit lowers it.
- Utility describes the satisfaction derived from consumption.
- Marginal revenue is calculated as the change in total revenue divided by the change in quantity sold.
- John Maynard Keynes viewed economics as a process of critical thought.
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