Applied Economics

Cards (31)

  • Applied Economics - is a branch of economics the deals with the application of economic theory and econometrics in real-world situations.
  • Ceteris Paribus - “all things being equal”. It refers to the assumption which controls the effect of other variables apart from those that are being analyzed in the study.
  • Failure to apply Ceteris Paribus - This is an error in analysis committed when an individual considers other extraneous variables in studying an economic phenomenon
  • Post hoc Fallacy - It involves the inference of causality (we assume that, because one event occurred before another event, the first event caused the second
  • Fallacy of Composition - This fallacy occurs when one considers a trait of one part or aspect of something as true or applicable for the whole.
  • Sweeping Generalization - This fallacy refers to a statement that oversimplifies a specific scenario presenting it as a rule
  • Production Possibilities Frontier (PPF) - is a graph that shows the greatest sum of outputs given accessible inputs or resources in an economy
  • Constant opportunity cost - is a situation in which the costs of pursuing a particular opportunity does not increase or decrease over time
  • Increasing opportunity cost - is a situation in which the costs of pursuing a particular opportunity increases over time.
  • absolute advantage - in producing a good over another country if it uses fewer resources to produce goods.
  • comparative advantage - when a good can be produced at a lower cost in terms of other goods (opportunity cost)
  • positive statements - describe what exist and how things work.
  • normative statements - depend on values and cannot be tested.
  • Economics - Is the study of the ways that individuals and societies and allocate their limited resources to satisfy their unlimited wants
  • Social Science - is the study how people behave and how they interact within a society
  • Economics as a Social Science - it studies how people make choices under the conditions of scarcity which is one of the main behavior of a human being.
  • Scarcity - is a situation in which people cannot have everything that they want because of limited resources.
  • Wants - things that are desired which are essential for human survival
  • Needs - Things that are desired but are not essential for survival
  • Land - Refers to all natural resources that exist without man’s intervention. It compasses all things derived from the forces of nature such as air, water, forests, vegetation, and minerals.
  • Labor - Refers to human inputs such as manpower skills that are used in transforming resources into different products that meet our needs.
  • Capital - is a man-made factor of production used to create another product. Examples machinery and equipment used in manufacturing companies.
  • Entrepreneurship - is the factor of production that integrates land, labor, and capital to create new products.
  • Entrepreneurs - is an individuals who makes decisions with regard to production and utilizing the other factors for production.
  • Market - In this economic system, resources are owned by private entities.
  • Command - In this economic system, resources are owned by government.
  • Mixed - In this economic system, resources are owned by both government and private entities.
  • Opportunity Cost - refers to the cost of giving up an alternative by selecting the best choice.
  • Trade Off - is a situation in which individual must choose between two things (or activities) that cannot be had (or done) at the same time.
  • Constant opportunity cost - is a situation in which the costs of pursuing a particular opportunity does not increase or decrease over time
  • Increasing opportunity cost - is a situation in which the costs of pursuing a particular opportunity increases over time.