Economic: Unit 1 – Flashcards
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Action or actives one person performs for another
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Services
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Limited quantities of resource to meet unlimited wants
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Scarcity
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Situation in which a good or service is unavailable
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Shortage
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Land, labor, and capital; the three groups of resources that are used to make all goods and service
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Factors of production
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When things are scarcity it is hard for people to meet all their wants and need
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Explain why scarcity and choice are basic problem of economics:
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Human made object used to create other good and services
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Physical Capital
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The knowledge and skills a worker gains through education and experience
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Human Capital
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They are the people who decide how to combine land, labor, capital resources to create good and service
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Explain the role of entrepreneur:
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The resource is limited to begin with
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Explain why economists say all resources are scarce:
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Shortage happen when producers will not or cannot offer goods or service at the current price but, scarce occur because the want and need are made from resource that are scarce
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Explain the difference between shortage and scarcity:
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An alternative that we sacrifice when we make a decision
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Trade off
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A phrase that refers to the trade- off that nations face when choosing whether to produce more of less military or consumer goods
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Guns or butter
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The most desirable alternative given up as the result of a decision
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Opportunity Cost
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deciding whether to do or use one additional unit of some resource
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Thinking on the Margin
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A graph that shows alternative ways to use an economy's resources
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PPC
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The line on a production possibilities graph that shows the maximum possible output
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PPF
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Using resources in such a way as to maximize the production of goods and services
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Efficiency
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Using fewer resources than an economy is capable of using
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Underutilization
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To a economist the alternative that is given up because of a decision
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Cost
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Law that states that as we shift factors of production from making one good or service to another, the cost of producing the second item increase
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Law of Increasing Cost
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When making a decision, you have to choose something over another and the thing you give up is the trade- off
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Describe why every decision involves trade offs:
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The most desirable alternative given up as the result of a decision
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Explain the concept of opportunity cost:
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Deciding whether to do something or use one additional unit of some resource
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Explain how people make decisions by thinking at the margin:
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A PPC shows the maximum possible output along the PPF. If a country's economic production is on the frontier, the economy is producing at top efficiency
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How does a PPC illustrate how efficient an economy is? How does a PPC illustrate opportunity cost?
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