1-4 Flashcards
economics
The study of how people choose to use their limited resources to satisfy their unlimited wants.
economy
A system used to manage limited resources for the production; distribution; and consumption of goods and services.
positive economics
The branch of economics that uses objective analysis to find out how the world works.
normative economics
The branch of economics that applies value judgments to data in order to recommend actions or policies.
scarcity
The condition that results because people have limited resources but unlimited wants.
tradeoff
The exchange of one benefit or advantage for another that is thought to be better.
cost-benefit analysis
A way to compare the costs of an action with the benefits of that action.
incentive
Any factor that encourages or motivates a person to do something.
specialization
The special line of work you have adopted as your career
division of labor
Division of work into a number of separate tasks to be performed by different workers
barter
To exchange goods or services without the use of money
voluntary exchange
The act of buyers and sellers freely and willingly engaging in market transactions
money
Anything that serves as a medium of exchange; a unit of account; and a store of value
economic interdependence
Economic activities in one part of the country or world affect what happens elsewhere
absolute advantage
The ability of an individual; a firm; or a country to produce more of a good or service than competitors; using the same amount of resources
comparative advantage
The ability to produce a good at a lower opportunity cost than another producer
economic equity
The attempt to balance an economic policy so that everyone benefits fairly
economic system
The system of production and distribution and consumption
traditional economy
An economy in which production is based on customs and traditions and economic roles are typically passed down from one generation to the next.
command economy
An economic system in which the government controls a country’s economy.
market economy
An economy that relies chiefly on market forces to allocate goods and resources and to determine prices
factor payment
The income people receive in return for supplying factors of production
mixed economy
An economy in which private enterprise exists in combination with a considerable amount of government regulation and promotion
free enterprise system
An economic system in which individuals depend on supply and demand and the profit margin to determine what to produce; how to produce; how much to produce; and for whom to produce. The quest for improvement financially and materially motivates consumers and producers.
goods
Tangible products that we use to satisfy our wants and needs
services
Activities that are consumed at the same time they are produced
factors of production
Land; labor; and capital; the three groups of resources that are used to make all goods and services
entrepreneurship
The process of starting; organizing; managing; and assuming the responsibility for a business
capital
Wealth in the form of money or property owned by a person or business and human resources of economic value
productivity
The ratio of the quantity and quality of units produced to the labor per unit of time (economics)
opportunity cost
The most desirable alternative given up as the result of a decision
production possibilities frontier (PPF)
A curve showing the maximum attainable combinations of two products that may be produced with available resources and current technology
