Goal 7 - Economics
About this set
Created by:
KNystrom on January 9, 2011
Subjects:
factors of production, economic choices, investment, economic systems
Classes:
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46 terms
Terms | Definitions |
|---|---|
 Economics | The study of how societies and people choose to use limited resources to satisfy unlimited wants and needs |
| Scarcity | Limited resource to fufill unlimited want and needs |
| Wants | Those things which make our lives more comfortable but are not needed for survival; examples - cell phone, car, movie tickets, etc. |
| Needs | Those things that are necessary for survival; example - food, water, shelter, etc. |
| Goods | Things that can be bought and sold |
| Services | Work that is performed for someone else |
| 3 Basic Economic Questions | What to produce? How to produce? For whom to produce? |
| Land | An economic resource (factor of production); property |
| Renewable Resources | Natural resources that can be replaced such as trees or water |
| Non-Renewable Resources | Natural resources that cannot be replaced or cannot easily be replaced such as minerals and oil |
| Labor | Factor of production; workers |
| White-collar Workers | Typically work in offices; management |
| Blue-collar Workers | Do jobs that typically involve manual labor, such as factor work or an auto mechanic |
| Capital | Factor or production; Any human-made resource that is used to create other goods and services or money for investment in the business |
| Financial Capital | Money invested into a business in order to start or expand it |
| Capital Goods | Machinery, buildings, etc.; anything man made that contributes to productivity |
| Entrepreneurship | Factor of Production ; business owners or inventors; the bring land, labor and capital together to start or operate a business |
| Opportunity Costs | The things that we give up when we decide to do one thing over another |
| Tradeoffs | The alternative we face when we decided to do one thing over another; can be both acceptable and unacceptable/negative; almost like costs and benefits |
| Incentives | Businesses use them to encourage someone to do something/buy their products, etc.; examples - coupons, rewards, etc. |
| Immediate Gratification | When people make economic decisions based on short-term wants rather than long-term needs |
| Economic Decision Making Model | The five-step process consumers usually follow when making economic choices |
| Fixed Costs | Business costs that do not depend on the level of production; costs that don't change; example - rent |
| Variable Costs | Business costs that change depending on the firm's level of production; example - wages and material |
| Total Costs | The overall cost of operating at a particular rate of production; Fixed costs + Variable costs |
| Marginal Costs | The costs and benefits of producing an additional good or service; as long as the marginal beneifts outweight the marginal costs than the business should continue to produce |
| Production (producers) | The supply of goods and services |
| Consumption (consumers) | The demand of consumers |
| Prices | Determined by supply and demand; producers and consumers |
| Division of Labor | Breaks down a job into a series of specific tasks for maximum production |
| Specialization | Each worker focuses on one or a few tasks which allows them to become good at it; the specific tasks and skills that an individual contributes to the division of labor |
| Mass Production | The production of goods in large quantities, made possible by the use of machinery and the division of labor |
| Assembly Line | Uses division of labor and specialization; in a factory, an arrangement where a product is moved from worker to worker, with each person performing a single task in the making of the product. |
| Factory | A large industrial building where workers (typically blue-collar) produce goods |
| Innovation | New technologies and inventions used in business success; |
| Automation | Refers to machinery replacing human labor; increases productivity and lowers business costs but can put people out of work |
| Investment | A way of spending money in order to get more money, goods, or services later |
| Inputs | The factors of production; such as land, labor, capital, and entrepreneurship; used to produce outputs |
| Outputs | The goods and services the economy produces using inputs (the factors of production) |
| Productivity | The amount of goods and services and economy creates; the quantity of goods and services produced from each unit of labor input |
| Profit | Money left over after all expenses have been paid; the reward for the risk of entrepreneurs |
| Law of Diminishing Marginal Returns | If each extra unit of output requires a growing amount of input to produce it, the business is facing diminishing returns; the more a business produces over time, the less money it will make on that good or service; when this point is reached the business should find a way to become innovative |
| Producer Price Index | Measurest the average change change in the prices charged to producers at all stages of production; example - the cost of steel to an auto manufacturer |
| Durable Consumer Goods | Goods to satisfy consumer needs and wants that last for three or more year; examples - cars and appliances |
| Semi-Durable Consumer Goods | Goods to satisfy consumer needs and wants that can be used for about a year or two; examples - clothing and shoes |
| Non-Durable Consumer Goods | Goods to satisfy consumer needs and wants that can only be used once; examples - food and diapers |
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