How can we help?

You can also find more resources in our Help Center.

40 terms

Economics, test one

Mr. McHugh
STUDY
PLAY
Economics
The study of how we make decisions in a world in which resources are limited but wants are unlimited
Scarcity
Limited resources to meet unlimited wants
Scarce
All goods and services we produce are ______
Shortage
This occurs when produces will not or cannot offer goods or services at the current prices
Needs
Something people require that is necessary for survival
Wants
And item we desire that is not essential to survival
Goods
Physical objects such as shoes and shirts
Services
Actions or activities that one person performs for another
Factors of production
Resources necessary to produce goods and services
Land
Includes all material in nature
Labor
Human effort-Both physical and mental
Capital
Any human-made resource used to produce other resources
Physical capital
A type of capital created for goods/services
Human capital
A type of capital that contains skills/education
Entrepreneurship
Ambitious leaders who decide how to combine land, labor, and capital resources to create new things
Fixed costs
Costs or expenses that are the same no matter how many units of goods are produced
Variable costs
Costs or expenses that change with the number of products produced
Total costs
Fixed costs and variable costs
Thinking at the margin
Deciding whether to use one additional unit of some resource
Marginal costs
The extra or additional cost of producing one additional unit of an output
Marginal revenue/benefit
The extra revenue that results from selling one more unit of an output
Cost-benefit analysis
An economic decision making technique that tells us to choose an action or make a decision when the benefits are greater than the cost
Law of diminishing marginal returns
If a store is open even when there is no business, the amount of money he makes will stay at a flat rate of zero (hypothetically speaking)
Trade off
Alternatives we sacrifice when we make a decision
Guns or butter
A theory that says that if there is a country that produces more military goods, the country has fewer resources to devote to consumer goods
Karl Marx
German who wrote "Communist manifesto" with Friedrich Engels
Proletariat
These classes own little, therefore, they sell labor to capitalists
Bourgeois
Person that owns factories and buys labor
John Keynes
This person developed a theory after the great depression. His ultimate goal was to tell economists and politicians how to get out of and avoid economical crisis'
Keynesian economics
A form of demand-side economics
Demand-side economics
Government spending and tax cuts help an economy by raising demand
Capitalism
Private citizens own and use the factors of production in order to seek a profit
Free enterprise economy
Another term used to describe the American economy
Self interest motives
What is another name for economic freedom
Consumer sovereignty
"Consumer is the king" of the market
Markets
Places where prices of goods and services are determined and exchange takes place
Competition
Struggle between buyers and sellers
Anti-Trust laws
This prevents monopolies
Adam Smith
This Scottish economist and philosopher wrote "The wealth of nations"
Laisse-Fairre
"To let alone"