Economics, test one
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40 terms
Terms | Definitions |
|---|---|
 Economics | The study of how we make decisions in a world in which resources are limited but wants are unlimited |
| Scarcity | Limited resources to meet unlimited wants |
| Scarce | All goods and services we produce are ______ |
| Shortage | This occurs when produces will not or cannot offer goods or services at the current prices |
| Needs | Something people require that is necessary for survival |
| Wants | And item we desire that is not essential to survival |
| Goods | Physical objects such as shoes and shirts |
| Services | Actions or activities that one person performs for another |
| Factors of production | Resources necessary to produce goods and services |
| Land | Includes all material in nature |
| Labor | Human effort-Both physical and mental |
| Capital | Any human-made resource used to produce other resources |
| Physical capital | A type of capital created for goods/services |
| Human capital | A type of capital that contains skills/education |
| Entrepreneurship | Ambitious leaders who decide how to combine land, labor, and capital resources to create new things |
| Fixed costs | Costs or expenses that are the same no matter how many units of goods are produced |
| Variable costs | Costs or expenses that change with the number of products produced |
| Total costs | Fixed costs and variable costs |
| Thinking at the margin | Deciding whether to use one additional unit of some resource |
| Marginal costs | The extra or additional cost of producing one additional unit of an output |
| Marginal revenue/benefit | The extra revenue that results from selling one more unit of an output |
| Cost-benefit analysis | An economic decision making technique that tells us to choose an action or make a decision when the benefits are greater than the cost |
| Law of diminishing marginal returns | If a store is open even when there is no business, the amount of money he makes will stay at a flat rate of zero (hypothetically speaking) |
| Trade off | Alternatives we sacrifice when we make a decision |
| Guns or butter | A theory that says that if there is a country that produces more military goods, the country has fewer resources to devote to consumer goods |
| Karl Marx | German who wrote "Communist manifesto" with Friedrich Engels |
| Proletariat | These classes own little, therefore, they sell labor to capitalists |
| Bourgeois | Person that owns factories and buys labor |
| John Keynes | This person developed a theory after the great depression. His ultimate goal was to tell economists and politicians how to get out of and avoid economical crisis' |
| Keynesian economics | A form of demand-side economics |
| Demand-side economics | Government spending and tax cuts help an economy by raising demand |
| Capitalism | Private citizens own and use the factors of production in order to seek a profit |
| Free enterprise economy | Another term used to describe the American economy |
| Self interest motives | What is another name for economic freedom |
| Consumer sovereignty | "Consumer is the king" of the market |
| Markets | Places where prices of goods and services are determined and exchange takes place |
| Competition | Struggle between buyers and sellers |
| Anti-Trust laws | This prevents monopolies |
| Adam Smith | This Scottish economist and philosopher wrote "The wealth of nations" |
| Laisse-Fairre | "To let alone" |
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