Ch2 - Resource Utilization Flashcards
What’s the biggest problem in economics?
Limited resources and unlimited wants.
Define “economics”.
The efficient allocation of scarce means of production to satisfy human wants.
What are the 4 economic resources?
Land, labor, capital, entrepreneurial ability.
What is the economic resource of land?
All the natural resources, including the ground (real estate) they are found in.
What is the economic resource of labor?
The work and time of employees.
How much of the total resource costs are paid in salary and wages labor.
2/3
What is the economic resource of capital?
The man-made goods used to produce goods/services (plant equipment, software).
What is the economic resource of entrepreneurial ability?
The extent of an individual to invest money, time and ideas in providing goods/services or start a business.
What makes resources scarce?
Limited quantity.
What is “interest”?
The return paid to the owners of capital.
What is opportunity cost?
The lost value of the decision not selected.
What is “full production” in an economy?
When resources being allocated in the most efficient manner possible. (>85% ute. Rate, 95% employment rate)
What is the “production possibilities frontier”?
Full production and full employment. (guns/butter curve)
What is the “law of increasing costs”?
When output of one good expands , the opportunity cost of producing that unit increases.
What are the 3 concepts that make the law of increasing costs?
- Law of diminishing returns
- Diseconomies of scale
- Factor suitability
