Flashcards for:
Understanding Applied Economics Concepts

Ceteris Paribus is a Greek term meaning 'all other things held constant,' used in economic analysis to examine the relationship between two variables while keeping other factors unchanged.

A command economy is one where all resources are governed and controlled by central government plans, often referred to as a planned economy.

The four basic decision problems in economics are consumption, production, distribution, and growth.

The word 'economics' originates from the Greek word 'oikonomia,' meaning household management.

Positive economics analyzes economic conditions as they are (objective and based on facts), while normative economics discusses how economic conditions should be (subjective and policy-oriented).

Applied Economics is the study of real-life economic situations to provide practical solutions, utilizing econometrics for testing hypotheses and forecasting outcomes.

The concept of 'No Free Lunch' implies that decisions involve trade-offs and there is a cost associated with every choice, highlighting that nothing is truly free in economic terms.

A market economy is characterized by private firms accounting for all production, allowing supply and demand to dictate prices and production levels, often referred to as a free market economy.

Understanding different economic systems is important because it aids in analyzing how societies organize production, allocate resources, and distribute goods, leading to better decision-making and policy development.

Microeconomics studies the economic behavior in particular markets and focuses on the behavior of individual consumers, producers, and businesses, whereas macroeconomics studies the economy as a whole.

The main economic production resources are land, labor, capital, entrepreneurship, and foreign exchange.

Scarcity refers to the condition where there are insufficient resources to satisfy all needs and wants, making it a fundamental concept that drives economic decision-making.

Macroeconomics focuses on the economic behavior of the economy as a whole, particularly the national economy, and examines aggregate flows of goods, services, and resources.

Opportunity cost is the value of the best-forgone alternative when making a choice. It represents the relative price of one item compared to another.

The fundamental questions are: What to Produce, How to Produce, For Whom to Produce, Are Resources Being Utilized, and Is the Economy Growing?

Primary measures used in macroeconomic analysis include Gross National Product (GNP) and Gross Domestic Product (GDP).