:) Flashcards
Economics
The study of way in which society decides to use scarce resources to satisfy unlimited wants.
The Economic problem
Resources are scarce but wants are infinite.
Scarcity
Limited quantities of resources to meet unlimited wants
Microeconomics
Deals with the economic problem at the individual level, and attempts to understand the consumer/producers’ decision making
Macroeconomics
Deals with the economic problem from society’s point of view, concerned with the performance of an entire economy
3 Economic systems
Market Economies (Capitalism), Mixed Economies, Command Economies (Communism)
Three Basic Economic questions
What to produce? How to produce? For whom to produce?
Ceteris paribus
a Latin phrase that means “all other things held constant”
Economic growth
A sustained increase in the productive capacity of an economy over a specific period of time, usually indicated by the increase availability of goods + services in the economy.
Needs
Things that are essential for life in our society.
Wants
Things we desire because they give us satisfaction in various types of goods + services.
Opportunity cost
The best alternative opportunity forgone when a choice is made (often referred to as ‘real cost’ or ‘economic cost’)
Productivity
A measure of the efficiency of production, expressed in terms of the rate of output per unit of inputs.
Factors of Production
resources that go into creating goods + services to satisfy human wants
Land
natural resources, found on planet Earth, used in the production of what people want e.g. river, forest, mineral + soils, oil
Labor
(physical effort) People are required to adapt the land resources for human use. Very focused on the productivity (efficiency of human labor to produce one item)
Capital
Any human made instrument of production, e.g. machinery, tools, factories, railways. Splits into; physical (human made stuff)/human capital (knowledge +skill), there needs to be both to ultimately provide goods + service
Enterprise
Ability to initiate the production (launching) process by combining all the other factors of production in order to make money. Including: creating new ideas, profits, industries and markets.
