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Economics chapter one
Terms in this set (25)
Shortages occur when
people have trouble supplying the goods and services at current prices.
The resources used to make goods and services are called
factors of production.
The purpose of a production possibilities graph is to
show alternative ways to use an economy's resources
Giving up one alternative for another is called
The skills and knowledge gained by a worker through education and experience are
Each point on a production possibilities curve shows
efficient utilization of resources.
Thinking at the margins means deciding about
adding or subtracting one additional unit of some resource.
Economics is the study of how people
choose from limited resources to meet their needs.
A country's production possibilities will grow if it
increases its resources.
Entrepreneurs are people who
put together land, labor, and capital to create new businesses.
Scarcity always exists because
our needs and wants are not limited, but our resources are limited.
Countries often have to choose between producing military or consumer goods, a trade-off economists call
guns and butter.
All the goods and services we produce are
when consumers want more of an item
than producers will offer at a particular price
the paid effort that a person devotes to a task
physical objects such as baseballs or umbrellas
natural resources used to produce goods and
knowledge gained from education and
What is the difference between a shortage and a scarcity?
A shortage can be temporary or long-term, but scarcity always exists.
An economy's use of fewer production resources than it would at
maximum production is called
A graph that shows alternative ways to use an economy's productive
resources is a
a Production possibilities curve
A country's maximum possible output plotted on a graph is called
Production possibilities frontier
The curve usually seen in a production possibilities frontier can be
explained by the
law of increasing cost
A production possibilities curve shows the relationship between the
any two categories of goods
The use of resources to maximize the output of goods and services is
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