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Definition
| We do not ever have enough of everything, including time, to satisfy our every desire |
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-not shortage
-Not poverty |
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Term
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| Activity that results in the making of resources into products that can be used in consumption |
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| What are the resources used in production called? |
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Definition
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| What are the 4 factors of production? |
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Definition
1. Land
2. Labor
3. Capital (Human and Physical)
4. Entrepreneurship |
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Term
| Factors of production: Land |
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Definition
| Resources that are available from nature |
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| Factor of production: Labor |
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Definition
| Human resource by people who work |
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| Factor of production: Physical Capital |
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Definition
| All manufactured resources, including buildings, equipment, machines and land improvement |
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Term
| Factor of production: Human Capital |
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Definition
| The accumulated training and education of workers |
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| Factor of production: Entrepreneurship |
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Definition
| Raising capital organizing, managing making business policy decisions. |
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Definition
| All things from which individuals get satisfaction or happiness |
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Definition
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Term
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Definition
The next best thing that must be sacrificed to get something you want
-why study when I can be watching the game? The game would be the opportunity cost |
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Term
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Definition
When you make a choice over another, the choice not chosen is the trade off
-study Econ>study spanish (spanish is the trade off) |
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Term
| Production possibilities curve (PPC) |
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Definition
Curve showing all possibilities between two things
-studying Econ vs studying Spanish |
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Term
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Definition
| Applied knowledge towards certain goods and services |
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Term
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Definition
| Getting out the most of what we have |
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Term
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Definition
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Term
| The Law of Increasing Relative Cost |
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Definition
the increase in the average cost of production that may arise beyond a certain point as a result of increasing the overall scale of production
-Also known as diminishing returns |
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Term
| Does scarcity still exist no matter how much economic growth there is? |
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Definition
| Yes, there will always be scarcity |
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Term
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Definition
| Use of goods for personal use |
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Term
| Why do we make capital goods? |
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Definition
| They enable us to produce larger amounts of consumer goods or make them less costly |
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Term
| Whenever we used productive resources to make capital goods, we are forgoing____ _______ |
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Definition
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Term
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Definition
Capital goods, then, are products which are not produced for immediate consumption; rather, they are objects that are used to produce other goods and services.
-Things like machinery, dump trucks, factories |
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Term
| Trade off between consumption goods and capital goods |
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Definition
| If we use more resources to make capital goods today then we can have more consumption goods in the future. The trade off is that making more capital goods today means giving up consumption goods today. |
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Definition
What an individual or a country specializes in specifics
-ex: a country may specialize in making coffee or technology |
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Definition
| Ability to perform an activity at a lower opportunity cost compared to others |
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Definition
| Ability to produce things better than anyone using the same resources |
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Term
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Definition
| Segregation of resources into different tasks |
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Term
| Why do economists consider one's 'wants' but not their 'needs' |
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Definition
| To economists, the term 'need' is undefinable whereas humans have unlimited wants, something that can be satisfied at least at a minimum |
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Term
| Why does scarcity lead people to evaluate opportunity costs? |
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Definition
| Because of scarcity, we as a society have to make goods to satisfy. And because there is a limited amount of resources, we also have to choose what goods we have to make, forcing us to choose to make more of one type of good over another. There is an opportunity cost of using scarce resources toward making one good instead of another good. |
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Term
| Absolute Advantage versus Comparative Advantage |
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Definition
| Absolute can make more goods than someone else who uses the same amount of resources. Comparative can produce goods at a lower opportunity cost than someone else. |
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