Unit One Econ – Flashcards
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the study of how individuals, families, businesses, and societies use limited resources to fulfill their unlimited wants
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Economics
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means that people do no and cannot have enough income and time to satisfy their every want
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scarcity
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resources of land, labor, capital, and entrepreneurship used to produce goods and services
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factors of production
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natural resources and surface land and water
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land
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human effort directed toward producing goods and services
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labor
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tangible objects that satisfy people's wants or needs
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goods
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activities done for others for a fee; satisfy people's wants and needs
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services
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the manufactured goods used to make other goods and produce other services
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capital
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the amount of output (goods and services) that result from a given level of inputs (labor, land, capital, and entrepreneurship)
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productivity
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when individuals take risks to develop new products and start new businesses in order to make profits
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entrepreneurship
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the use of science to develop new products and new methods for producing and distributing goods and services
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technology
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anything other than what people need for basic survival is a want
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difference between want and a need
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Land, labor, capital, and entrepreneurship
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what are the four factors of production?
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scarcity always exists because of competing alternative uses for resources, whereas shortages are temporary
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what is the difference between scarcity and shortages
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scarcity
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what is the condition that results because wants are unlimited?
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sacrificing one good or service to purchase or produce another
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Trade-off
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value of the next best alternative given up for the alternative that was chosen
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opportunity cost
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graph showing the maximum combinations of goods and services that can be produced from a fixed amount of resources in a given period of time
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production possibility curve
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whenever you make a trade-off, an opportunity is given up (opportunity cost)
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how are trade-offs and opportunity costs related?
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to sacrifice an activity in order to do something else
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what does making a trade-off require you to do?
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opportunity cost
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what do economists call the next best alternative that was given up for the one chosen?
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cost is something sacrificed in order to do something else
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in economics, what is cost?
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the maximum combinations of goods and services that can be produced from a fixed amount of resources in a given period of time l these curves show what the opportunity cost will be if a particular action is taken.
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what does a production possibilities curve show?
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the branch of economic theory that deals with behavior and decision making by small units such as individuals and firms
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Microeconomics
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the branch of economics theory dealing with the economy as a whole and decision making by large units such as governments
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Macroeconomics
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the production and distribution of goods and services in a society
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economy
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a theory or simplified representation that helps explain and predict economic behavior in the real world
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economic model
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an assumption involving two or more variables that must be tested for validity
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hypothesis
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because economists' beliefs influence how they view facts and fit them into theories; economists obtain different values
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Why are there different schools of economic thought?
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real world data is used to analyze how the real world works; helps explain and predict economic behavior in the real world
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for what purposes do economists use real-world data in building models?
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economic models
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what are theories in economics called?
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way in which a nation uses its resources to satisfy people's needs and wants
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economic system
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the process of freely exchanging goods and services between buyers and sellers
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market
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economic system in which private individuals own the factors of production
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capitalism
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amount earned after a business subtracts its costs from its revenues
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profit
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desire to make money that motivates people to produce and sell goods and services
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profit incentive
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any person or group that buys or uses goods/services to satisfy personal needs and wants
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consumer
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manufactured items that have a life span of longer than 3 years
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durable goods
