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34 terms

Econ

STUDY
PLAY
economics
examines how individuals, institutions, and society make choices under conditions of scarcity
goods
tangible
services
intangible
3 basic economic questions
what to produce? how to produce? for whom to produce?
utility
the pleasure, happiness, or satisfaction obtained from consuming a good or service
opportunity cost
the next best alternative foregone when an economic decision is made
rational decision making
the process of weighing up the opportunity cost and benefits of an activity
land
everything that grows on land or is found under it and everying in or under the sea
labor
physical and mental contribution of individuals
capital
all manufactored aids used in producing consumer goods/services satisfy our wants indirectly because they aid in the production of consumer goods
entrepreneurship
starting the business(raising capital)
command economy
the government answers all economic equations
free market economy
individuals answer all economic questions. all production is in private handsd and supply/demand set wages and prices in the economy.
transition economies
movement of countries from command to market
mixed economies
every country is mixed. different combinations. part command, part market
ceteris paribus
holding all but one of the variables constant "all things being equal"
positive
facts/ cause-and-effect relationships "what is" deals w/ areas that are capable of being proven to be correct or not. Deals w/ what the economy is actually like
normative
judgements/opinions "what ought to be" looks at the desirability of certain aspects of the economy. deals w/ areas that are open to personal opinion and belief
ppc
graphical representation of 2 goods that can be produced if an economy, firm, etc. uses its resources fully and efficiently
economic growth
the increase in real national income per capita (movement inside ppc closer towards the curve)
economic development
a measure of welfare, a measure of how wonderful life is
sustainable development
development that meets the needs of the present without compromising the ability of future generations to meet their own needs
scarcity
The situation in which unlimited wants exceed the limited resources available to fulfill those wants.
what does scarcity do?
restricts options and demands choices
rent
payment for land
wages
payment for labor
interest
payment for capital
profit
payment for entrepreneurship
china textiles
example command economy
real
having allowed effects of inflation
national income
value of all goods and services produced in an economy during a time period
per capita
per head/population
welfare of people
what does the ppc not tell you?
land, labor, entrepreneurship, capital
factors of production