CH-1 Flashcards
Define “Factors of Production” and list the 4 main ones.
The resources used to produce goods and services.
Land. Labor. Capital. Entrepreneurship.
Define: Capital
Final goods produced for use in the production of other goods, such as equipment and structures.
Define: Production Possibilities
The alternative combinations of final goods and services that could be produced in a given period with all available resources and technology.
Define: Production Possibilities Curve (PPC)
A PPC describes the various output combinations that could be produced in a given time period with available resources and technology.
What is the Law of Increasing Opportunity Costs
This law says that we must give up ever increasing quantities of other goods and services in order to get more of a particular good.
Define: Market Mechanism
The use of market prices and sales to signal desired outputs (or resource allocations). [The Invisible Hand]
Define: Mixed Economies
An economy that uses both market signals and government directives to allocate goods and resources.
Define: Normative Analysis (as distinct from Positive Analysis)
This incorporates subjective Judgments about what ought be done
Define: Positive Analysis (As distinct from Normative Analysis)
This form of analysis focuses on how things might be done with out subjective judgments about what is “best”
Macroeconomics
The study of aggregate economic behavior, of the economy as a whole.
Microeconomics
The study of individual behavior in the economy, of the components of the larger economy.
Define: Scarcity
The lack of enough resources to satisfy the desire for those resources.
Define: Entrepreneurship
The assembling of resources to produce new or improved products and technologies.
