Econ Exam

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What is economics?
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Terms in this set (21)
1. Durable, physical, goods used to make other goods. "Any produced thing that can enhance a person's power to perform economically useful work."

2. Tools, Machines, Components used in production

3. Money or funds used by entrepreneurs and businesses to buy what they need to make their products or provide their services or to that sector of the economy based on its operation, i.e. retail, corporate, investment banking, etc.

4. Human Capital "The stock of competencies, knowledge, social and personality attributes, including creativity, embodied in the ability to perform labor so as to produce economic value.
Law of Substitute Goodsan increase in the Price of a Substitute shifts the demand curve for the primary good to the right (increases demand).The Law of Complementary Goodsan increase in the Price of a Complement shifts the demand curve for the primary good to the leftOpportunity Costthe value of the highest-valued forsaken alternative. Differs for each good and for each individual (highly subjective).Production Possibilities FrontierA production possibilities frontier is set of the combinations of two goods that either · a society, or · an individual is capable of producing.economic growthis biased toward one good or another (although it can be neutral, favoring neither good).Does gold make a nation wealthy? Adam SmithNo, the division of labor through specialization makes a nation wealthyDoes gold make a nation wealthy? MercantilistsYes. Limit imports and expand exports (through tariffs)Does gold make a nation wealthy? Physiocrats:No. Land makes a nation wealthy.Smith's Wealth of Nations (1776)"The division of labor is limited only by the extent of the market."Division of labor is ultimately the source of all value in economic development.Many economists would agree with that statement.Law of SupplyTendency of suppliers to offer more of a good at a higher price