examines how individuals, institutions, and society make choices under conditions of scarcity
3 basic economic questions
what to produce? how to produce? for whom to produce?
the pleasure, happiness, or satisfaction obtained from consuming a good or service
the next best alternative foregone when an economic decision is made
rational decision making
the process of weighing up the opportunity cost and benefits of an activity
everything that grows on land or is found under it and everying in or under the sea
physical and mental contribution of individuals
all manufactored aids used in producing consumer goods/services satisfy our wants indirectly because they aid in the production of consumer goods
starting the business(raising capital)
the government answers all economic equations
free market economy
individuals answer all economic questions. all production is in private handsd and supply/demand set wages and prices in the economy.
movement of countries from command to market
every country is mixed. different combinations. part command, part market
holding all but one of the variables constant "all things being equal"
facts/ cause-and-effect relationships "what is" deals w/ areas that are capable of being proven to be correct or not. Deals w/ what the economy is actually like
judgements/opinions "what ought to be" looks at the desirability of certain aspects of the economy. deals w/ areas that are open to personal opinion and belief
graphical representation of 2 goods that can be produced if an economy, firm, etc. uses its resources fully and efficiently
the increase in real national income per capita (movement inside ppc closer towards the curve)
a measure of welfare, a measure of how wonderful life is
development that meets the needs of the present without compromising the ability of future generations to meet their own needs
The situation in which unlimited wants exceed the limited resources available to fulfill those wants.
what does scarcity do?
restricts options and demands choices
payment for land
payment for labor
payment for capital
payment for entrepreneurship
example command economy
having allowed effects of inflation
value of all goods and services produced in an economy during a time period
welfare of people
what does the ppc not tell you?
land, labor, entrepreneurship, capital
factors of production