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Unit One Econ
Terms in this set (38)
the study of how individuals, families, businesses, and societies use limited resources to fulfill their unlimited wants
means that people do no and cannot have enough income and time to satisfy their every want
factors of production
resources of land, labor, capital, and entrepreneurship used to produce goods and services
natural resources and surface land and water
human effort directed toward producing goods and services
tangible objects that satisfy people's wants or needs
activities done for others for a fee; satisfy people's wants and needs
the manufactured goods used to make other goods and produce other services
the amount of output (goods and services) that result from a given level of inputs (labor, land, capital, and entrepreneurship)
when individuals take risks to develop new products and start new businesses in order to make profits
the use of science to develop new products and new methods for producing and distributing goods and services
difference between want and a need
anything other than what people need for basic survival is a want
what are the four factors of production?
Land, labor, capital, and entrepreneurship
what is the difference between scarcity and shortages
scarcity always exists because of competing alternative uses for resources, whereas shortages are temporary
what is the condition that results because wants are unlimited?
sacrificing one good or service to purchase or produce another
value of the next best alternative given up for the alternative that was chosen
production possibility curve
graph showing the maximum combinations of goods and services that can be produced from a fixed amount of resources in a given period of time
how are trade-offs and opportunity costs related?
whenever you make a trade-off, an opportunity is given up (opportunity cost)
what does making a trade-off require you to do?
to sacrifice an activity in order to do something else
what do economists call the next best alternative that was given up for the one chosen?
in economics, what is cost?
cost is something sacrificed in order to do something else
what does a production possibilities curve show?
the maximum combinations of goods and services that can be produced from a fixed amount of resources in a given period of time l these curves show what the opportunity cost will be if a particular action is taken.
the branch of economic theory that deals with behavior and decision making by small units such as individuals and firms
the branch of economics theory dealing with the economy as a whole and decision making by large units such as governments
the production and distribution of goods and services in a society
a theory or simplified representation that helps explain and predict economic behavior in the real world
an assumption involving two or more variables that must be tested for validity
Why are there different schools of economic thought?
because economists' beliefs influence how they view facts and fit them into theories; economists obtain different values
for what purposes do economists use real-world data in building models?
real world data is used to analyze how the real world works; helps explain and predict economic behavior in the real world
what are theories in economics called?
way in which a nation uses its resources to satisfy people's needs and wants
the process of freely exchanging goods and services between buyers and sellers
economic system in which private individuals own the factors of production
amount earned after a business subtracts its costs from its revenues
desire to make money that motivates people to produce and sell goods and services
any person or group that buys or uses goods/services to satisfy personal needs and wants
manufactured items that have a life span of longer than 3 years
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