-
Economics
The study of how to allocate scarce resources among competing ends.
-
Scarcity
This occurs because our unlimited desire for goods and services exceeds our limited ability to produce them due to constraints on time and resources.
-
Positive Economics
This type of economics describes the way things are.
-
Normative Economics
This type of economics addresses the way things should be.
-
Factors of Production/Inputs
- The resources used in the production process, including:
- Labor
- Human Capital
- Entrepreneurship
- Natural Resources/Land
- Capital
-
Labor
The physical and mental effort of people.
-
Human Capital
Knowledge and skills acquired through training and experience.
-
Physical Capital
Manufactured goods that can be used in the production process, including tools, equipment, buildings, and machinery.
-
Entrepreneurship
The ability to identify opportunities and organize production, and the willingness to accept risk in the pursuit of rewards.
-
Natural Resources/Land
Any productive resource existing in nature, including wild plants, mineral deposits, wind, and water.
-
Opportunity Cost
The value of the best alternative sacraficed as compared to what actually takes place.
-
Trade-Offs
The cost of making one product (chair) over another (birdcage).
-
Production Possibilities Frontier
An illustration showing the choices an economy faces and the opportunity cost of making one good rather than another.
-
Efficiency
This occurs when an economy is using all of its resources productively.
-
Slope
The "rise over run" of a line.
-
Absolute Value
The value after removing the negative sign.
|
|