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IB Economics Chapter 1
Terms in this set (37)
Studies people in a society and how these people interact with one another.
Physical objects that are capable of being touched-tangible.
Items people must have to survive
Items people would like but are not needed for immediate physical survival.
The result of an inability to satisfy all of everyone's wants.
Ways of allocating finite resources to fulfill infinite wants.
Give or provide
A study of Rationing Systems and how scarce resources are allocated
The next best alternative foregone when an economic decision is made.
Goods and services that require scarce resources to be sacrificed in order for them to be produced.
Goods that have zero opportunity costs of production
Factors of production
Resources that allow an economy to produce its output. (Land, labor, capital, management)
Everything that is grown on the land or found under it. Everything that is found in and under the sea, includes all natural resources.
Physical and mental contribution of the existing workforce to production.
The investment in physical capital and human capital.
The collection of manufactured resources that is used to produce goods and services in the economy.
The value of the workforce
Management and Entrepreneurship
The willingness and ability of certain individuals to organize the three other factors of productions and take risks.
Production Possibility Curves
Used to show concepts of scarcity, choice, opportunity cost, etc. Shows maximum combinations of goods and services that can be produced in a certain time.
A statement that can be proven right or wrong.
A matter of opinion and cannot be proven right or wrong.
5 Disadvantages of a Free Market
- Demerit goods (harmful) are over provided
- Merit goods (benefit) are under provided.
- Resources may be used up too quickly.
- Parts of society will not be able to look after themselves
- Firms may grow so large that they dominate industries.
4 Disadvantages of a Planned Economy
- Shortages and surpluses. Economic decision are too complicated to plan
- Resources will not be used efficiently.
- Gov't dominance
- Unpopular gov't plans implemented.
The value of all the goods and services produced in an economy in a given time period.
Route A of National Income
Expenditures on goods/services
Route B of National Income
Total value of output on goods/services
Route C of National Income
Total income of households for the firms using their factors of production.
Problem with measuring Nat'l Income
The persistent increase in the average price level of an economy
"Real" Nat'l Income
Having allowed for the effects of inflation.
Production Possibility Curve
Measure of welfare
- Education Indicators
- Health Indicators
- Social Indicators
Human Development Index (HDI)
Weighs up real national income per head (literacy, schooling, life expectancy) when determining rank of the most "developed" countries.
Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
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