Basic economic concepts Flashcards
Scarcity
resource available insufficient to satisfy all human wants
Opportunity cost
highest-valued option forgone
Interest
● opportunity cost for earlier availability of resources
● compensation for deferred consumption
Private property rights
● exclusive right to use
● exclusive right to receive income
● right to transfer
Positive statement
can be refuted by facts and does not involve value judgments
Normative statement
cannot be refuted by facts and involves value judgments
Primary production
extracts natural resources
Secondary production
turns raw materials into semi-finished or finished products
Tertiary production
provides services
Producer goods
used for further production of goods and services
Consumer goods
used to satisfy human wants
Public goods
● non-rival and non-excludable in consumption
● one’s consumption won’t reduce quantity available to others
Free good
● More of it is not preferred
● Not produced from scarce resources which have alternative uses
