Ch 1 - Economics: The Core Issues Flashcards
capital
final goods produced for use in the production of other goods, e.g., equipment, structures
scarcity
lack of enough resources to satisfy all desired uses of those resources
factors of production
resource inputs used to produce goods and services
entrepreneurship
the assembling of resources to produce new or improved products and technologies
economics
the study of how best to allocate scarce resources among competing uses
opportunity cost
the most desired goods or services that are forgone to obtain something else
production possibilities
the alternative combinations of final goods and services that could be produced in a given time period with all available resources and technologies
efficiency
maximum output of a good from the resources used in production
economic growth
an increase in output (real GDP)’ an expansion of productions possibilities
market mechanism
the use of market prices and sales to signal desired outputs (or resources allocations)
laissez faire
the doctrine of “leave it alone”, of nonintervention by government in the market mechanism
mixed economy
an economy that uses both market signals and government directives to allocate goods and resources
market failure
an imperfection in the market mechanism that prevents optimal outcomes
government failure
government intervention that fails to improve economic outcomes
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
ceteris paribus
the assumption of nothing else changing
3 core choices confronting every nation
what to produce, how to produce, for whom to produce
4 types of production
land, labor, capital, entrepreneurship
production possibilities curve (PPC)
various output combinations that could be produced in a given time period with available resources and technology
Karl Marx
government should not only intervene but must own all means of production
John Maynard Keynes
government should play an active but no all-inclusive role in managing the economy
law of increasing opportunity cost
we must give up ever-increasing quantities of other goods an services in order to get more of a particular good
