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01 - IB Economics - Microeconomics - Foundations to Economics
Terms in this set (35)
something like air, food, or shelter that is necessary for survival
an item that we desire but is not essential to survival
study of how humans make decisions and choices under unlimited wants and limited resources
tangible / physical objects such as clothes or shoes
intangible items, actions or activities one person performs for another
limited quantities of resources and unlimited wants
a situation in which a good or service is unavailable, or a situation in which the quantity demanded is greater than the quantity supplied, also known as excess demand
Factors of production
land, labor, and capital; the three groups of resources that are used to make all goods and services
natural resources that are used to make goods and services
the effort that people devote to a task for which they are paid
any human-made resource that is used to create other goods and services
all human-made goods that are used to produce other goods and services; tools and buildings
the knowledge and skills a worker gains through education and experience
a person who is able and willing to take the risk of combines land, labor, and capital to create and market new goods or services for profit.
an alternative or option we consider when we make a decision
Guns or butter
a phrase that refers to the trade-off that nations face when choosing whether to produce more or less military or consumer goods
the most desirable alternative given up as the result of a decision
Thinking at the margin
deciding whether to do or use one additional unit of some resource
Production possibilities curve
a curve that shows alternative ways to use an economy's resources
Production possibilities frontier
the line on a production possibilities graph that shows the maximum possible output for a specific economy
using resources in such a way as to maximize the production of goods and services
using fewer resources than an economy is capable of using
an alternative that is given up as the result of a decision
an assumption of "all other things equal"
The increase in the value of the goods and services produced in an economy.
A measure of welfare and well-being of the society of an economy.
Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
The value of all the goods and services produced in an economy in a given time period, normally one year.
What to produce?
The economic question relating to what products should be produced with the limited available resources.
How to produce?
The economic question relating to what method of production and allocation of the 4 factors of production.
For whom to produce?
The economic question relating to who is able to receive and attain the product. It involves the establishment of discriminating criteria to determine those who are eligible of receiving.
The study of the social features of humans and the ways in which they interact and change
Ability or capacity of a good or service to be useful and give satisfaction to someone.
the study of the economic behavior and decision making of individual units, such as individuals, families, and businesses
the study of the economy as a whole and the major factors of economic performance, including unemployment, inflation, economic growth, equity distribution, and balance of trade between countries.
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