Economics- Chapter 1 and 2

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  1. Exists when there are not enough resources to satisfy human wants
  2. the study of how individuals and societies satisfy their unlimited wants with limited resources
  3. What are the 3 questions that scarcity leads to?
    • 1. What will be produced?
    • 2. How will it be produced?
    • 3. For whom will it be produced?
  4. What are the 4 factors of production?
    • 1. Land
    • 2. Labor
    • 3. Capital (Tools, Machinery, Factories, etc.)
    • 4. Entrepreneurship
  5. All of the resources made and used by people to produce goods and services
  6. involves the vision, skills, and risk-taking needed to create and run businesses
  7. Methods used to encourage people to take certain actions
  8. the benefit or satisfaction recieved from using a good or service
  9. To ___________________ means to make decisions according to the best combination of costs and benefits
  10. the alternative people give up when they make choices
  11. the value of something that is given up to get something else that is wanted
    opportunity cost
  12. an approach that weighs the benefits of an action against its costs
    cost-benefit analysis
  13. the additional cost of using one more unit of a product
    marginal cost
  14. the additional satisfaction from using one more unit of a product
    marginal benefit
  15. simplified representation of economic forces
    economic model
  16. a graph used by economists to show the impact of scarcity of an economy
    Production Possibilities Curve (PPC)
  17. invloves producing the maximum amount of goods and services possible
    efficiency (on the line of PPC)
  18. means producing fewer goods and services than possible
    underutilization (under the line of PPC)
  19. states that as production switches from one product to another, increasing amounts of resources are needed to increase the production of the second prodcut
    law of increasing opportunity cost
  20. information in numerical form
  21. the study of individuals, families, and businesses in an economy
  22. the study of the economy as a whole and is concerned with large-scale economic activity
  23. studies economic behavior as it is
    positive economics
  24. involves judgements of what economic behavior ought to be
    normative economics
  25. an economic system in which people produce and distribute goods according to customs handed down from generation to generation
    traditional economy
  26. an economic system in which the government makes all economic decisions
    command economy
  27. an economic system in which individual choice and voluntary exchange direct economic decisions
    market economy
  28. a system in whihc central government officials make all economic decisions
    centrally planned economy
  29. an economic system in which the government owns some or all of the factors of production
  30. an economic system in which the government owns all the factors of production and there is little or no political freedom
  31. systems require absolute obedience to those in power
  32. the rights of individuals and groups to own businesses and resources
    private property rights
  33. an place where people buy and sell goods and services
  34. the principle that the government should not interfere in the market place
    lassiez faire
  35. an economic system that is based on private ownership of the factors of production
  36. is a trade in which both traders believe that what they are getting is worth more than what they are giving up
    voluntary exchange
  37. the idea that consumers have unlimited control over what is produced because they are free to buy what they want and to reject what they don't want
    consumer sovereignty
  38. a situation in which people concentrate their efforts in the activities that they do best
  39. the market where goods and services are bought and sold
    product market
  40. the market for the factors of production
    factor market
  41. an economy that has elements of traditional command and market systems
    mixed economy
  42. means to changed from private ownership to government or public ownership
  43. refers to all the economic interactions that cross international boundaries
    global economy
Card Set
Economics- Chapter 1 and 2
Economics- Chapter 1 and 2
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