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Economics Chapter 1 Test
Dr. G econ 7th period
Terms in this set (39)
An item that is necessary for survival (air, food, or shelter).
An item that we desire, but are not essential for survival.
The study of how people seek to satisfy their needs and wants by making choices. the economizing problem is essentially one of deciding how to make the best use of limited resources to satisfy unlimited economic wants.
Physical objects such as shoes and shirts (anything manufactured).
Actions or activities that one person performs for another.
The key economic concept that serves as the basis for the study of economics. Scarcity implies limited quantities of resources to meet unlimited wants. (scarcity always exits, not be fixed).
Occurs when producers will not or cannot offer goods or services at the current prices. Shortages can usually be fixed.
All natural resources used to produce goods and services
The effort that a person devotes to a task for which they are paid, can be physical or mental.
Any man made resource that is used to produce other goods and services. There are two categories: physical and human
Man made objects used to create other goods and services, includes buildings and tools (shoe factory building and all of the sewing machines)
The knowledge and skills a worker gains through education and experience. An economy requires both physical and human capital to produce goods and services.
Brings together economic resources and assumes the risk in a capitalist economy. He pulls land, labor, and capital together creating all goods and services.
All the alternatives that we give up whenever we choose one course of action over the other.
Guns or Butter
A country that decides to produce more military goods (guns) has fewer resources to devote to consumer goods (butter) and vise versa (resources are limited)
The most desirable alternative given up as the result of a decision. Although many trade-offs may be possible within a set of choices only one of these- the next best choice- is considered the opportunity cost.
Thinking at the Margin
When you decide how much more or less to do, you are thinking at the margin. (another unit)
Production Possibilities Curve
Shows alternative ways to use an economy's resources.
factors of production
resources required to produce the things we would like to have, are land, capital, labor, and entrepreneurs.
the tools, equipment, machinery; and factories used in the production of goods and services
Gross domestic product
the dollar value of all final goods, services, and structures produced within a country's borders in a 12- month period.
Any good that lasts three years or more when used on a regular basis.
An item that lasts fewer than three years when used on a regular basis.
refers to a worth that can be expressed in dollars and cents.
Paradox of Value
Apparent contradiction between the high value of a nonessential item and the low value of an essential item.
Capacity to be useful and provide satisfaction.
All tangible items.
A location or other mechanism that allows buyers and sellers to exchange a specific product.
The factors of production are bought and sold.
Where producers sell their goods and services.
Occurs when a nation's total output of goods and services increases over time.
A measure of the amount of goods and services produced with a given amount of resources in a specific period of time.
Division of labor
A way of organizing work so that each individual worker completes a separate part of the work.
We rely on others, and others rely on us, to provide most of the goods and services we consume.
Production possibilities frontier
A diagram representing various combinations of goods and services an economy can produce when all its resources are in use.
A simplified equation, graph, or figure showing how something works.
Cost- benefit analysis
A way of comparing the costs of an action to the benefits received.
Free enterprise economy
In which the consumers and privately owned businesses, rather than the government, make the majority of the what, how, and for whom decisions.
Standard of living
The quality of life based on the ownership of the necessities and luxuries that make life easier.
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