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Unit 1 Micro Economics - Short Def

Terms in this set (38)

Absolute advantage
Exists when a country can produce a good or service at a lower cost than other countries.
Accounting profit
An actual outlay or expenses incurred in the production of a good that shows up in a firm's accounting statements and records.
Adam Smith
Father of of economics.
Capital
One of the four basic categories of resources, or factors of production. It includes the manufactured (or previously produced) resources used to manufacture or produce other things.
Capital Goods
Buildings, structures, machines, or tools that are used to produce goods or services.
Command Economy
An economic system controlled by strong, centralized government, which usually focuses on industrial goods. With little attention paid to consumer goods.
Comparative advantage
The ability of a country to produce a good at a lower marginal opportunity cost than another country can. (L-MOP-C)
Consumer Goods
Goods produced for present consumption.
Economics
is the study of how individuals and societies, experiencing virtually limitless wants, choose to allocate their scarce resources to satisfy their wants.
Efficiency
Getting something done with a minimum of effort, expense, or waste.
Entrepreneurship
Entrepreneurship is a special sort of human effort that takes on the risk of bringing labor, capital, and land together and organizing production.
Equity (in economics)
A distribution of assets, resources, and tax liability among the people in a nation or society that is considered fair and just. While some believe that economic equity requires that all citizens pay the same amount, others believe that the amount paid should depend on the amount that each citizen can afford to pay without undue hardship.
Explicit cost
A cost that involves a money payment and usually a market transaction.
This should be contrasted with implicit cost that does NOT involve a money payment or a market transaction. Explicit cost is also termed out-of-pocket or accounting cost.
Export
Goods leaving a country
Factors of Production
The basic factors used to produce goods and services in the economy--labor, capital, land and entrepreneurship. These are also called resources or scarce resources.
Free Market
A market with few government restrictions on how a good or service can be produced or sold or on how a factor of production can be employed.
Human capital
The sum total of a person's productive knowledge, experience, and training.
The acquisition of human capital is what makes a person more productive. One of the most notable methods of stocking up on human capital is through formal education
Import
Goods entering a country
Implicit Cost
An opportunity cost that does NOT involve a money payment or a market transaction.
Incentives
A cost or benefit that motivates a decision or action by consumers, workers, firms or other participants in the economy.
Inefficient
wasteful of resources, time, or energy
Invisible Hand
A phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits for all.
Labor
Human effort directed toward producing goods and services.
Land
Any natural resource provided by nature and used in the production process
Macroeconomics
A part of economics that looks at the operation of a nation's economy as a whole
Marginal Analysis
A basic technique used in the economics that analyzes small, incremental changes in key variables.
Market
The organized exchange of commodities (goods, services, or resources) between buyers and sellers within a specific geographic area and during a given period of time.
Market Economy
An economy that operates by voluntary exchange in a free market and is not planned or controlled by a central authority; a capitalistic economy.
Microeconomics
Study of a single factor of an economy - such as individuals, households, businesses, & industries - rather than an economy as a whole.
Mixed Economy
An economy in which private enterprise exists in combination with government regulation.
Opportunity Cost
The highest-valued alternative that must be given up to engage in an activity.
Production Possibilities Curve/Frontier (PPC)
A curve showing the different combinations of two goods or services that can be produced in a full-employment, full-production economy where the available supplies of resources and technology are fixed.
Property Rights
Legally established titles to the ownership, use, and disposal of factors of production and goods and services that are enforceable in the courts.
Resources
The basic factors used to produce goods and services in the economy--labor, capital, land and entrepreneurship. These are also called factors of production.
Scarcity
A situation in which unlimited wants exceed the limited resources available to fulfill those wants
Specialization
Development of skills in a specific kind of work
Three Basic economic questions
1) What goods and services should be produced,
2) How should the goods and services be produced,
3) For whom should the goods and services be produced"
Trade-off
Alternatives that must be given up when one is chosen over another.
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