Ch1 Sec1-2 Flashcards
Scarcity
When there are limited resources to produce what people want
Economics
Study of how people try to satisfy wants through scarce resources
Financial capital
Money use to start businesses
Entrepreneurs
Driving force in economy, responsible for most change in economy
Four key elements of economics
Description, analysis, explanation, prediction
Gross domestic product
Dollar values of all goods produced by a country over 12 months
Good
An item wanted by people
Consumer goods
Are for people
Capital goods
Manufactured goods used to produce other goods
Consumer
Person who uses goods to satisfy needs
Utility
The ability of something to be useful and pride satisfaction
Wealth
Accumulation of products
Market
Location where buyers and sellers exchange economic products
Factor market
Where people earn their income
Product market
Where producers sell goods to consumers
Paradox of value
Water has little value, diamonds have high value
Productivity
Measure of the amount produced by inputs over time
Division of labor
Work is arranged so individual workers do fewer tasks than before
Specialization
Each worker perform few tasks more frequently
Human capital
Sum of skills abilities health motivation
Opportunity cost
The cost of your next best alternative to your money
Cost benefit analysis
Way of thinking about a problem that compares the cost to the benefits
