chapter 1 Flashcards
the study of how people manage their resources to meet their needs and enhance their well-being
economics
a term used to refer broadly to a good quality of life
well-being
questions about how things are
positive questions
questions about how things should be
normative questions
a goal that is desirable because its achievement will bring you closer to your final goal(s)
intermediate goal
a goal that requires no further justification; it is an end in itself
final goal
harmful side effects, or unintended consequences, of economic activity that affect those who are not directly involved in the activity
negative externalities
beneficial side effects, or unintended consequences, of economic activity that accrue to those who are not among the economic actors directly involved in the activity
positive externalities
the market value of all final goods and services produced within a country’s borders over a specific time period, normally one year
gross domestic product (GDP)
the use of resources, or inputs, such that they yield the highest possible value of output or the production of a given output using the lowest possible value of inputs
economic efficiency
a measure of welfare based on survey questions asking people about their own degree of life satisfaction
subjective well-being (SWB)
preserving or improving the resources that contribute to the enhancement of well-being, including natural, manufactured, human, and social resources
resource management
the conversion of resources into goods and services
production
the sharing of products and resources among people
distribution
the trading of one thing for something else
exchange
the giving of something, with nothing specific expected into return
transfer
the final use of a good or service
consumption
the concept that resources are not sufficient to allow all goals to be accomplished at once
scarcity
a curve showing the maximum amounts of two outputs that society could produce from given resources, over a given period
production-possibilities frontier (PPF)
the value of the best alternative that is forgone when a choice is made
opportunity cost
the development of new methods of converting inputs (resources) into outputs (products or services)
technological progress
the subfield of economics that focuses on activities that take place within and among the major economic organizations of a society
microeconomics
the subfield of economics that focuses on the economy as a whole
macroeconomics
an analytical tool that highlights some aspects of reality while ignoring others
model
a graphical representation of the traditional view of an economy consisting of households and firms engaging in exchange
circular flow diagram
markets for the service of land, labor, and capital
factor markets
markets for newly produced goods and services
product markets
households, families, and informal community groups
core sphere
firms that produce goods and services for profitable sale
business sphere
governments as well as other organizations that seek to enhance well-being without making a profit
public purpose sphere
