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Unit 1 Econ
Terms in this set (21)
descriptive statements that make a claim about how the world is
prescriptive statements that make a claim about how the world should be
two variables change in the same direction, as one increases so does the other
two variable vary inversely, one increases while the other decreases
the examination of the costs and benefits of a marginal (small) change in the production of goods or an additional unit of an input or good.
ex of marginal analysis
a bakery might use marginal analysis to determine the potential benefits of an increase in bread production. This decision-making tool is useful for helping people and businesses decide how to allocate their scarce resources in order to minimize costs and maximize benefits.
basic economic problem
human wants are unlimited but resources are scarce
all things are equal
factors of production
land, labor, capital goods, and entrepreneurship
production possibilities curve (PPC)
a curve depicting all maximum output possibilities for two goods, given a set of inputs consisting of resources and other factors
law of increasing opportunity cost
states that as you increase production of one good, the opportunity cost to produce an additional good will increase.
an economy in which production, investment, prices, and incomes are determined centrally by a government.
economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's individual citizens and businesses
law of supply and demand
when an item is scarce, but many people want it, the price of that item will rise. Conversely, if there is a larger supply of an item than consumer demand warrants, the price will fall.
what can shift the supply and demand curves
non-price factors such, if theres health warning the demand will decrease and supply will rise. If it's proven to increase health there is an increase in demand and decrease in supply
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