Chapter 18

  1. Economics
    the study of how we make decisions in a world where resorces are limited
  2. needs
    the things we need for survival such as food, clothing, and shelter
  3. wants
    the things we would like to have
  4. scarcity
    • the fundamental economic problem
    • not having enough recources to provide for the things we need
  5. trade-off
    the alternative you face if you decide to do one thing rather than another
  6. opportunity cost
    the cost of the next best use of time and money when choosing to do one thing or another
  7. marginal cost
    an additional or extra opportunity cost accociated with an action
  8. incentives
    rewards offered to try to persuade people to take certain economic actions
  9. rational choice
    choosing the alternative that has the greatest value among comparable quality products
  10. fixed costs
    expenses that aer the same no matter how many units of a good are produced
  11. variable costs
    expences that chang with the number of products produced
  12. total costs
    fixed costs + variable costs
  13. marginal benefit
    the additional or extra benefit associated with an action
  14. cost-benefit analysis
    economic model that compares the marginal costs and marginal benefits of a decision
  15. market economy
    • a system in which individuals own the factors of production and make economic decisions through free interaction (stock, target, ect)
    • capitalism
  16. free enterprise
    economic system where businesses can compete for profit with minimum government interaction
  17. capitalism
    a private system in which citizens own most of the means of production
Card Set
Chapter 18