Economics Test: Unit 1 – Flashcards

a situation in which a good or service is unavailable (temporary)

an alternative we sacrifice when we make a decision

the study of how people seek to satisfy their needs and wants by making choices

the most desirable alternative given up as the result of a decision

limited quantities of resources to meet unlimited wants (not temporary)

the branch of economics concerned with the aggregate, or overall, economy

using resources in such a way as to maximize the production of goods and services

using fewer resources than an economy is capable of using

branch of economics that deals with small units, including individual companies and small groups of consumers

a rational decision-maker takes action if and only if the marginal benefit of the action exceeds the marginal cost (getting up early to study vs sleeping later)

ambitious leader who combines land, labor and capital to create and market new goods or services

land, labor and capital; the three groups of resources that are used to make all goods and services

a curve that shows alternative ways to use an economy's resources

the skills and knowledge gained by a worker through education and experience

all human-made goods that are used to produce other goods and services; tools and buildings

as we shift factors of production from making one good or service to another, the cost of producing the second item increases

a social and political philosophy based on the belief that democratic means should be used to evenly distribute wealth throughout a society

a political system characterized by a centrally planned economy with all economic and political power resting in the hands of the central government

the doctrine that states that government generally should not intervene in the marketplace

the total value of all final goods and services produced in a particular economy

a shared good or service for which it would be impractical to make consumers pay individually and to exclude non payers

Economists use these to analyze the choices and trade-offs that people make.

You would use this when you're trying to make a decision and weigh out pros and cons to make your decision easier.

Goods and services are bought and sold to supply others of their needs and wants.

What goods & services should be produced? How should these goods and services be produced? Who consumes these goods and services?

Economic Efficiency Economic Freedom Economic Security & Predictability Economic Equity Economic Growth & Innovation

They rely on habit, custom or ritual to decide what to produce. Resources are owned by the community. Community is responsible for their own needs and there's little need for goods/services.

Resources are owned and controlled by individuals. Competition determines price which increase the quality of the product. Ownership = Private Property.

The government makes decisions and determines how resources will be used. Consumers have few choices and shortages are common. Little to no private ownership.

Government and individuals share the decision making process. Prices are set by what consumers want and by what society believes is essential.

It's the most effective economy for providing goods and services.

1.Economic Freedom- people have the right to choose occupations and work where they can find a job 2.Competition- producers can engage in rivalries to gain business 3. Property- Individuals & businesses can buy and sell as much property as they want 4.Contracts- individuals & businesses can make agreements to buy and sell goods 5.Self-Interest- consumers & producers can make decisions on the basis of their own benefit 6.Voluntary Exchange- consumers & producers may freely buy & sell goods when the opportunity costs of such exchanges are worthwhile 7.Profit Move- the force that encourages people & organizations to improve their material well-being

1. economic efficiency 2. economic freedom 3. economic growth 4. additional goals

It shows the interactions between households and businesses in the free market.