Term
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Definition
| society doesn't have enough resources to make everything we want |
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Term
| How does scarcity affect decision-making? |
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Definition
| People try to satisfy near unlimited wants with their limited resources |
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Term
| What is a need? Contrast this with a want. |
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Definition
A need is the basic requirement for survival whereas a want expresses a need.
[You can need food but want pizza] |
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Term
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Definition
There Is No Such Thing As A Free Lunch
Someone's going to have to pay for it even if we think it's "free" |
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Term
| What are the 3 basic questions that need to be answered before making economic choices? |
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Definition
1) WHAT will you produce?
2) HOW will you produce it?
3) FOR WHOM will you produce it for? |
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Term
| What are factors of production? (not list) |
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Definition
| The resources required to produce the things that we would want |
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Term
| List the 4 factors of production and explain them briefly. |
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Definition
1) land = natural resources available; anything not man-made
2) Capital = equipment, factories, money [*unique!*]
3) Labor = people's efforts & abilities
4) Entrepreneurs = risk takers that seek profits and does something new w/ existing resources; provide initiative |
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Term
| Why is the factor of production, capital, unique? |
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Definition
It is a factor of production that is also the result of production.
I.E.- equipment is also the result of production and later helps in production |
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Term
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Definition
process of creating goods/ services
only possible with the factors of production |
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Term
| What is Gross Domestic Product (GDP)? |
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Definition
the dollar value of all final goods/services, and structures produced in a year
measures total output of a nation |
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Term
| What are economic products? |
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Definition
| Goods/services that are useful, relatively scarce and transferable to others |
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Term
| What is a good? a consumer good? a capital good? |
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Definition
Good = item that's useful and satisfies economic want
Consumer good = intended for final use by individuals
capital good = manufactured items that are used to make other goods/services |
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Term
| what makes a good durable as opposed to nondurable? |
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Definition
| Durable goods last 3+ years when used on a regular basis |
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Term
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Definition
| Work that is performed for someone [intangible] |
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Term
| What makes you a consumer? =D |
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Definition
| You're a person who uses goods/services to satisfy wants and needs |
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Term
| What does value refer to? |
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Definition
| The worth that can be expressed in an actual monetary value (i.e.-$3.25) |
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Term
| What is the paradox of value? Use the example of water and diamonds. |
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Definition
Oddity where some necessities are worth little money but non-necessities are worth a LOT more.
Scarcity itself is not enough to make a value.
25ยข per gallon of water VS $200 diamond ring |
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Term
| Why is utility important in order for an object to have value? |
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Definition
| Items need to be useful and provide satisfaction but it may not be fixed or measurable |
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Term
| Define the concept of wealth. |
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Definition
It is the accumulation of tangible, scarce, useful, and transferable products
Services cannot be counted b/c they are intangible but it's NOT unimportant |
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Term
| What is this thing called a market? |
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Definition
A location where buyers & sellers can exchange economic products
[local, regional, national, global, or cyberspace] |
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Term
| Individuals earn their incomes in factor markets. What are these FMs? |
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Definition
| markets where productive resources are bought and sold |
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Term
| What are product markets? |
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Definition
| Producers sell their goods/services to consumers |
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Term
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Definition
Did that help?
You might want to go back and study the circular flow a bit more |
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Term
| What defines economic growth? |
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Definition
| It occurs when a nation's total output of goods/services increases over time |
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Term
| What does the term productivity describe? |
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Definition
| the measure of the amount of output produced by a given amount of inputs in a specific period of time |
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Term
| How can division of labor improve productivity? |
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Definition
| Work is setup so that workers do less tasks than before but the specialization results in higher productivity because of efficiency |
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Term
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Definition
the sum of all skills, abilities, health, and motivation of people
Businesses can invest with training programs that improve skill and motivation
Gov't can invest in such in providing education and health care |
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Term
| Give an example of a tradeoff. |
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Definition
Tradeoffs are alternative choices
Having $40 and needing to choose between concert tickets, CDs, a CD player, or clothing.
Analyze your costs -- even if they're not monetary! |
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Term
| What is opportunity cost? |
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Definition
When you choose to buy one thing, it's the cost of the next best alternative use of money, time and resources.
If you spend $10 on magazines, the opp. cost is everything else you could have bought with the $10 |
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Term
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Definition
| way of pondering a problem where you compare the costs and benefits received |
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Term
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Definition
| quality of life based on possession of necessities/luxuries that make life easier |
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Term
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Definition
Nearly all economic activity comes from ritual/ habit/ tradition. It also defines social behavior and ppl aren't free to decide what they would want/have
Adv: everyone knows the role to play
Disadv: discourages new ideas thus lower standard of living
Examples: indigenous groups |
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Term
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Definition
Central authority makes the economic decisions
Adv: can change economic direction quickly + health/public services available to all for little/no cost
Disadv: not meet wants of consumers + no incentive to work hard + needs large decision making bureaucracy + inflexible in day-to-day problems
Examples: N Korea, former Soviets, Cuba |
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Term
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Definition
People/firms make the economic decisions and markets allow ppl to come together in order to exchange goods/services
Examples: US, Canada, Japan, GB |
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