42 terms

Economics Chapter 1

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Terms in this set (...)

What is Scarcity?
The economic condition that arises because society does not have enough resources to produce all the things people would like to have.
Define Needs
Basic requirement for survival
Give an example of a need
communication, love, acceptance, knowledge, hope, accomplishment, food, clothing, and shelter
What does TINSTAAFL mean?
In the end someone always pays for the supposedly "free" lunch. ( producing costs, shipping cost, ETC...)
What does TINSTAAFL stand for?
There is no such thing as a free lunch!!!
What are trade-offs?
alternative choices when spending income or time.
what is an example of a trade-off?
instead of getting the Ipad you wanted you settle for a Nook player
what are the Factors Of Production?
Labor, Capital, Land, and Entrepreneur
what is Labor?
People with all the efforts,abilitys, and skills.
What is Capital?
The tools, equipment, and factorys uesd in the production of goods and services.
What is Land?
"Gifts of Nature"
What is an Entrepreneur?
Risk takers in search of profits.
What is utility?
The capacity to be useful to someone
What is an example of utility?
If it is a really hot day and you are super thristy and you buy a lemonade that lemonade is extreamly valuable to you but one you buy your 5th lemonade that 5th lemonade is not worth nearly as much as your 1st
What is a want?
Means of expressing a need
What is an example of a want?
Pizza, video games, nice shoes, ETC...
What are the 3 basic questions?
HOW to produce? WHAT to produce? For WHOM to produce?
How does the Traditional economy answer the 3 basic questions?
HOW: The way we always have.
WHAT: The things we always have made.
WHOM: For the people we have always produced for.
How does the Command economy answer the 3 basic questions?
HOW: How the central power tells them to
WHAT: what the central power wants them to
WHOM: For those whom the central power wants them to
How does the Market economy answer the 3 basic questions?
HOW: Effeciently
WHAT:what is in demand
WHOM: Those who can pay for it
- people and firms act in their own best intrests
What is Opportunity Cost?
The cost of the next best alternatives of money time or resources.
What is an example of an Opportunity Cost?
Buying Lions tickets because Tiger tickets cost too much
What Service?
Work preformed for someone.
What is an example of a Service?
Oil Changed
What is Conspicuous Consumption?
the use of a good or service to impress others
What is an example of Conspicuous Consumption?
ganster Bling!!!
What is a good?
a tangible comodity
what is a durable good?
good that lasts 3 years or more when used on a regular basis
what is a capital good?
a manufactured good used to produce other goods or services
what is a consumer good?
a good intended for final use by customers
what is a nondurable good?
a good that doesnt last 3 years when being used on a regular basis
what is an example of a good?
book, CD player, car
what is an example of a durable good?
car, clothes, oven
what is an example of a capital good?
bulldoser, cash register, manufacturing machines
what is an example of a consumer good?
car, hat, cheese, apples in a bag
What is an example of a nondurable good?
food, phones, ice
What is a strength of a Traditional Economy?
everyone is taken care of in society, stable predicable and continuous, clear roles/ no uncertainty
What is a weakness of Traditional Economy?
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What is a strength of Command Economy?
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What is a weakness of Command Economy?
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What is a strength of a Market Economy?
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What is a weakness of a Market Economy?
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