Economics Unit 1 Answers – Flashcards
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scarcity
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fundamental economic problem facing all societies that results from a combination of the shortage of resources and people's virtually unlimited wants
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economics
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social science dealing with the study of how people satisfy seemingly unlimited and competing wants with the careful use of scarce resources
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need
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basic requirement for survival; includes food, clothing, and/or shelter
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want
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way of expressing or communicating a need; a broader classification than needs
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factors of production
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productive resources that make up the four categories of land, capital, labor, and entrepreneurship
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land
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natural resources or "gifts of nature" not created by human effort; one of four factors of production
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capital
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tools, equipment, and factories used in the production of goods and services; one of four factors of production
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financial capital
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money used to buy the tools and equipment used in production
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labor
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people with all their abilities and efforts; one of four factors of production, does not include the entrepreneur
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entrepreneur
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risk-taking individual in search of profits; one of four factors of production
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production
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process of creating goods and services with the combined use of land, capital, labor, and entrepreneurship
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Gross Domestic Product (GDP)
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dollar value of all final goods, services, and structures produced within a country's national borders during a one-year period
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economic product
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dollar value of all final goods, services, and structures produced within a country's national borders during a one-year period
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good
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tangible economic product that is useful, relatively scarce, transferable to others; used to satisfy wants and needs
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consumer good
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good intended for final use by consumers rather than businesses
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capital good
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good intended for final use by consumers rather than businesses
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service
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work or labor performed for someone; economic product that includes haircuts, home repairs, forms of entertainment
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value
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worth of a good or service as determined by the marketj
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paradox of value
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apparent contradiction between the high value of nonessentials and low value of essentials
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utility
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ability or capacity of a good or service to be useful and give satisfaction to someone
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wealth
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sum of tangible economic goods that are scarce, useful, and transferable from one person to another; excludes servic
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market
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meeting place or mechanism allowing buyers and sellers of an economic product to come together; may be local, regional, national, or global
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factor market
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market where productive resources are bought and sold
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product market
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market where goods and services are offered for sale
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economic growth
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sustained period of time during which a nation's total output of goods and services increases
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productivity
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degree to which abundunt resources are used efficiently; normally refers to labor, but can apply to all factors of production
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division of labor
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separation of work into a number of separate tasks to be performed by different workers; same as specialization
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specialization
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assignment of tasks so that each worker performs fewer functions more frequently; same as division of labor
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human capital
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sum of peoples' skills, abilities, health, and motivation
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economic interdependence
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economic activities in one part of the country or world affect what happens elsewhere
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trade-off
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alternatives that must be given up when one is chosen rather than another
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opportunity cost
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cost of the next best alternative use of money, time, or resources when one choice is made rather than another
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production possibilities frontier
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diagram representing maximum combinations of goods and/or services an economy can produce when all productive resources are fully employed
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cost benefit analysis
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way of thinking that compares the cost of an action to its benefits
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free enterprise economy
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market economy in which privately owned businesses have the freedom to operate for a profit with limited government intervention; same as private enterprise economy
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standard of living
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quality of life based on ownership of necessities and luxuries that make life easier
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worth of a good or service as determined by the market
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paradox of value
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apparent contradiction between the high value of nonessentials and low value of essentials
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utility
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ability or capacity of a good or service to be useful and give satisfaction to someone
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wealth
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sum of tangible economic goods that are scarce, useful, and transferable from one person to another; excludes services
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market
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meeting place or mechanism allowing buyers and sellers of an economic product to come together; may be local, regional, national, or global
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factor market
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market where productive resources are bought and sold
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product market
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market where goods and services are offered for sale
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economic growth
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sustained period of time during which a nation's total output of goods and services increases
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productivity
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degree to which abundunt resources are used efficiently; normally refers to labor, but can apply to all factors of production
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division of labor
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separation of work into a number of separate tasks to be performed by different workers; same as specialization
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specialization
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assignment of tasks so that each worker performs fewer functions more frequently; same as division of labor
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human capital
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sum of peoples' skills, abilities, health, and motivation
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economic interdependence
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economic activities in one part of the country or world affect what happens elsewhere
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trade-off
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alternatives that must be given up when one is chosen rather than another
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opportunity cost
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cost of the next best alternative use of money, time, or resources when one choice is made rather than another
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production possibilities frontier
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diagram representing maximum combinations of goods and/or services an economy can produce when all productive resources are fully employed
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PAGE(S) 21scarcity
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fundamental economic problem facing all societies that results from a combination of the shortage of resources and people's virtually unlimited wants
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economics
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social science dealing with the study of how people satisfy seemingly unlimited and competing wants with the careful use of scarce resources
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need
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basic requirement for survival; includes food, clothing, and/or shelter
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want
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way of expressing or communicating a need; a broader classification than needs
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factors of production
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productive resources that make up the four categories of land, capital, labor, and entrepreneurship
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land
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natural resources or "gifts of nature" not created by human effort; one of four factors of production
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capital
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tools, equipment, and factories used in the production of goods and services; one of four factors of production
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financial capital
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money used to buy the tools and equipment used in production
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labor
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people with all their abilities and efforts; one of four factors of production, does not include the entrepreneur
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entrepreneur
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risk-taking individual in search of profits; one of four factors of production
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production
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nonessentials and low value of essentials
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