Econ test 1 review

Terms in this set (23)

individual choice
decisions by individuals concerning what to do and what not to do
economy
a system that coordinates choice about production with choice about consumption
market economy
production/consumption is the result of decentralized firms/individuals
resource
anything that can be used to produce something else
land
resources coming from nature (minerals, water, timber, etc)
labor
the effort of workers
capital
manufactured goods used to produce other goods/services (machinery, tools, etc)
entrepreneurship
risk-taking/innovation
scarce
not enough of it available to satisfy the various ways a society wants to use it (resources)
opportunity cost
value of what you give up for something else
microeconomics
focuses on choices made by individuals and how these decisions interact
economic aggregates
economic measures (unemployment rate, GDP, inflation rate) that summarizes data across several different markets
macroeconomics
focuses on the bigger picture and the overall ups and downs of an economy
positive economics
questions that have definitive right or wrong answers
normative economics
economic analysis saying how the world SHOULD be
command economy
industry is publicly owned and a central authority makes decisions
incentives
rewards or punishments that motivates choices
property rights
establishes ownership and and grants the right to trade goods and services
marginal analysis
study of the costs and benefits of doing a little bit more of an activity vs doing a little bit less
trade-off
give up something in order to have something else
production-possibilities curve model
illustrates the trade-offs facing an economy that only produces two goods
efficient
no missed opportunities
technology
technical means for producing goods/services
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