Economics Chapter 1 Study Guide Flashcard

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Scarcity
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the condition where unlimited human wants face limited resources
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Economics
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the study of how people satisfy wants with scarce resources
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Need/want
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need- required for survival want- desired for satisfaction
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What are the three basic economic questions and why are they important?
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1) what must we produce it? 2) how should we produce it? 3) for whom should we produce? *society decides these
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What are the 4 factors of production? (know & be able to describe)
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1) land- limited natural resources (landforms, animals) 2) capital- something is produced by ($, tools) 3) labor- workers who apply their efforts 4) entrepreneurs- risktakers who combined land, labor, and capital into new products
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What are the 4 key elements of the science of economics?
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description, analysis, explanation, and prediction
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economic products
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anything that has been produced
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goods
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items that are economically useful or satisfy an economic want (consumer/capital and durable/nondurable
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services
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work performed for someone
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consumers
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use goods and services to satisfy wants and needs
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value
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woth expressed in dollars and cents
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paradox of value
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wants are scarce and expensive, needs are plentiful and cheap ex: water and diamonds
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utility
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goods or services capacity to provide satisfaction, which varies with wants and needs to each person
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wealth
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accumulation of goods that are tangible, scarce, useful, and transferable to another person
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the circular flow of economic activity (what is it?)
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graph
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markets
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locations for buyers and sellers to trade
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economic growth
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steady growth in the productive capacity of the economy (and so a growth of national income).
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productivity
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measure of the amount of output produced by the amount of inputs within a certain time
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human capital
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the collective skills, knowledge, or other intangible assets of individuals that can be used to create economic value for the individuals
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economic interdependence
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what you do affects other people
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trade-offs/opportunity cost
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the cost of the next best alternative choice. It’s the money, time, or resources a person gives up to make final choice.
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production possibility frontiers
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way of illustrating opportunity costs
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free enterprise economy
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An economic system in which the means of production and distribution are privately or corporately owned and development is proportionate to the accumulation and reinvestment of profits gained in a free market.
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standard of living
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