basics of economics Flashcards
Economics
study of choice under conditions of scarcity
scarcity
a situation in which the amount of sth available is insufficient to satisfy the desire for it
2 types of scarcity
- time 2. spending power
choice
made due to scarcity. We choose how to allocate our scarce time and spending power. Each time we make a choice to buy sth we also choose not to buy or do sth else. –> opportunity cost
opportunity cost
what we forgo when we make that choice/ everything we give up to make that choice
what value is attached to the time given up for choice
monetary value
OC -
$ actually paid out + dollar value of the time given up
= explicit cost + implicit cost
explicit cost
the $ sacrificed and actually paid out for a choice
implicit cost
the value of sth sacrificed when no direct payment is made
what are resources?
land, labor, capital, entrepreneurship -> anything in economy comes from the combination of resources
labor
the time human being spend producing goods and service
capital
any long lasting tool that is itself produced and helps us make other goods and services
physical capital
the part of the capital stock consisting of physical goods ex) machinery, factories
human capital
the skills and training of the labor force
ex) education and training
capital stock
the total amount of capital at a nation’s disposal at any point in time
