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Economic Chapter one
Terms in this set (30)
Condition of not being able to have al the goods and services one wants because wants exceed what can be made from all available resources at any given time
Labor, Land, Capital
What are the Factors of Production?
human efforts directed towards producing goods and services
natural resources and surface, land and water
previously manufactured goods used to make other goods and services
ability of risk taking individuals to develop new producers and start new business in order to make profits
sacrificing one good or service to purchase another good or service
production possibilities 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
helps people in businesses determine how much of each item to produce, which read to revealing the trade-offs and opportunity costs involved in each decision
what is the practical application of the production possibilities curve?
production point inside the curve
what is it called when you are not using all your resources and you don't know if that'll be good or bad or not yet?
you would be using more than you have. You cant do that!
why can't the point be outside of the curve?
that you have increased your resources
what does it mean if the PP curve shifts to the right?
the lose of wages or obtaining money right away
what is the opportunity cost of going to a university for four years after high school, instead of working?
to show visual representation of consumer business or other economic behavior, and that in the real world everything is changing at once and a model helps keep everything steady
how do economists used models to study the real world?
because all economists deal with different facts that change their visuals for the solutions for the world's problems and because their theories are better than others at explaining solutions
Why are there different schools of economic thought?
production possibilities curve
model we've used already?
define the problem!
what is the first step in developing a hypothesis?
the study of how individuals and societies make choices about ways to use scarce resources to fulfill their wants?
condition of not being able to have all the goods and services one wants, because wants exceed what can be made from all available resources at any given time
factors of production
resources of land, labor and capital and entrepreneurship used to produce goods and services
tangible objects that can satisfy people's wants or needs
actions that can satisfy people's wants or needs
the amount of output (goods or services) that result from a given level of inputs (land, labor, capital, entrepreneurship)
advance in knowledge leading to new and improved goods and services and better ways of producing them
value of the next best alternative given up for the best alternative that was chosen
the branch of economic theory that deals with behavior and decision making by small units such as individuals and firms
the branch of economic theory dealing with the economy as a whole and decision making b 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
as assumption involving two or more variables that must be tested for validity
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