Basics Flashcards
Define Economics
The study of how society satisfies their unlimited wants with limited resources
What is a need? Name four
Something needed for survival: food, clothing, shelter, water.
What is a want?
A desire that can be satisfied by consuming a good or service.
What is a good?
A physical product produced by a business
What is a service?
An activity performed to satisfy ones wants or needs.
What is a producer?
One who makes goods or provides services
What is a consumer?
One who purchases goods or services for personal use.
What is scarcity?
The result of an inability to satisfy unlimited wants with limited resources.
What is a trade-off?
A choice that involves giving up something to have more of another
What are incentives?
Reasons for increasing profit, interest, wages, and rent.
What is an opportunity cost?
The best alternative given up when making a choice
What is cost-benefit analysis?
An approach that weighs the benefits of an action against its cost.
What is the PACED decision model?
A cost-benefit analysis method. Stands for: define the Problem list the Alternatives determine the Criteria Evaluate the alternatives make the Decision
What are factors of production?
All of the resources that go into making a good or service.
What are the four factors of production?
Human/labor, capital, natural/land, and entreprenurial.
What are capital resources?
All resources made and used by people to produce and distribute goods and services. Ex: tools, machinery, offices, etc.
Is money a capital resource
NO
What are the three basic questions?
1. The allocation question A. What will be produced? B. How much will be produced? 2. The production question A. How will it be produced? 3. The distribution question A. For who will it be produced
What is a production possibility schedule?
A Chart listing all possibilities of production
What is a production possibility curve?
A graph that shows the impact of scarcity on an economy.
What is efficiency?
Efficiency is using resources in such a way as to maximize the production of goods and services
What is underutilization?
Using fewer resources than an economy is capable of using.
