Term
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Definition
| When the price of a product falls, then the product will be relatively more attractive to people than other products whose prices have stayed unchanged. It is likely that consumers will purchase more of the product, substituting it for products that were previously purchased. |
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Term
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Definition
| non-physical activities people want |
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Term
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Definition
Physical objects that people need and want.
Example: clothes, means of transportation, food |
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Term
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Definition
Condition in which avaliable resources are limited.
Example: there is a limited number of food in the world. |
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Term
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Definition
| The study of a society and the way individuals interact within it. |
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Term
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Definition
| The study of choices leading to the best possible use of the scarce resources in order to satisfy unlimited human needs and wants. |
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Term
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Definition
| Benefit or satisfaction humans take from consuming a good or service. It goes down with each good or service consumed. Example: A person will have less satisfaction for each individual hamburger after having eaten 5 hamburgers. |
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Term
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Definition
| Value of the next best alternative that must be sacrificed to get something else. Therefore, it is what you give up in order to gain something. It can be money, time or resources. |
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Term
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Definition
| Any good that is scarce, therefore has zero opportunity cost. Nothing must be given up in order to achieve this. Examples: salt water and air. |
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Term
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Definition
Scarce; natural resources or resources made of natural resources.
The opportunity cost is greater than zero because they cost money due to the fact that they are scarce. |
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Term
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Definition
All resources or imputs used to produce a good or service. Consists of:
LAND: natural resources used and land;
LABOR: human resources determined by population, age, skill and training;
CAPITAL: man-made factors of production used to produce goods or services;
ENTERPRENEURSHIP/ MANAGEMENT: undertake the risk of organizing and combining factors for production. |
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Term
| Rent, Wage, Interest, Profit |
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Definition
| Payment that owners of factors of production receive for providing their resources to the production process |
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Term
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Definition
| Payment to those who provide LABOR (including bonuses) |
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Term
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Definition
| Payment to owners of LAND resources who supply their LAND to the production process. |
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Term
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Definition
| Payment to owner of CAPITAL resources |
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Term
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Definition
| Payment to owners of ENTERPRENEURSHIP. |
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Term
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Definition
| The consumers of a good or service. |
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Term
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Definition
| The businesses behind the production of goods and services. |
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Term
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Definition
| Households selling their factors of production to firms recieving payment. The amount of money they gain by working (wages), renting their house (rent), etc. |
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Term
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Definition
| Payment households make to buy goods or services. |
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Term
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Definition
| Payment firms make to buy the factors of production. (Land, Labor, Capital, Enterpreneurship) |
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Term
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Definition
| Payment firms make to buy the factors of production. |
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Term
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Definition
| Latin for "All other things equal", used when there is no external influence on something. |
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Term
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Definition
Describe something.They may be:
True or false;
Statement in theory. Example: Increase in price leads to decrease in quantity purchased;
Cause-and-effect relationship. Example: if government increases spending, unemployment will fall. |
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Term
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Definition
| They say "what ought to be". They are subjective statements of what should happen. Example: unemployment rate should be lower. They cannot be true or false. |
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Term
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Definition
| Goods and services produced by economies for consumers. |
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Term
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Definition
| When the quantity of output produced by an economy increases. |
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Term
Economic Contraction
or
Negative Economic Growth |
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Definition
| When the quantity of output produced by an economy over a period of time decreases. |
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Term
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Definition
| When the standard of living and well-being of people grows; increase in income and reduction in poverty. |
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Term
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Definition
| Development which meets the needs of the present without compromising the ability of future generations to meet their own needs. |
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Term
Production Possibilities Curve (PPC)
or
Production Possibilities Fronteir (PPF) |
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Definition
[image]
Shows the production abilities based on avaliable resources. To produce the greatest output all the resources must be employed (all used) and all must be employed in an efficient manner (all used in the best possible way). |
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Term
| Production Possibility Curve in relation to Scarcity, Choice and Opportunity Cost |
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Definition
Condition of scarcity...
- does not allow the economy to produce outside the PPC.
- forces the economy to make a choice about what particular combination of goods it wishes to produce.
- means choices involve opportunity costs.
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Term
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Definition
- It tends to bend to the right; hence opportunity varies from point to point.
- It is straight when the opportunity cost is constant and does not change.
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Term
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Definition
- Shifts outwards to the right mean production has an INCREASE due to
- Increase of factors of production
- Improvement in resource quality (such as more educated labor)
- New and improved technology being used to produce goods.
- Shifts inwards to the left mean production has a DECRESE due to:
- Decrease in the factors of production
- Diminishing resource quality
- Use of less productive technology
- Shifts are not always parallel or equal in both factors. Sometimes only one of the factors of the PPC will change.
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Term
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Definition
| Goods purchased by consumers that satisfy immediate needs and wants. |
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Term
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Definition
| Goods purchased by consumers that satisfy immediate needs and wants. |
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Term
| Questions generated by scarcity |
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Definition
- What should be produced? (resource allocation)
- How to use the resources? How to produce?
- For whom to produce? (distribution of income)
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Term
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Definition
| Assigning avaliable resources or factors of production to specific uses |
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Term
| Reallocation of resources |
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Definition
| When the economy reassigns resources to form a different combination of two goods. |
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Term
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Definition
| Too much of a resource assigned to what is socially desirable. |
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Term
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Definition
| Too few resources assigned to what is socially desirable. |
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Term
Distribution of Income
or
Distribution of Output |
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Definition
How much income different individuals in the population will recieve;
or
How much output will different individuals in the population recieve. |
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Term
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Definition
| When distribution of income for certain individuals or groups either increase or decrease. |
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Term
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Definition
MARKET:
Private ownership of resources, private decision-making, relying on prices determined in the free market.
COMMAND:
Government (public) ownership of resources and decision-making, relies on commands and non-price rationing techniques.
MIXED:
Mix of public and private resource ownership and decision-making; and price and non-price rationing |
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Term
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Definition
PUBLIC SECTOR: parts of the economy under ownership of the government
PRIVATE SECTOR: parts of the economy under private ownership |
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Term
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Definition
| Can be made by either the public or private sector. |
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