Chapter 1 Flashcards
the inputs, or factors of production, used to produce the goods and services that people want
resource
examines how people use their scarce resources to satisfy their unlimited wants
economics
all human creations used to produce goods and services
capital
consists of factories, tools, machines, computers, buildings, airports, highways, and other human creations used to produce goods and services
physical capital
the knowledge and skill people acquire to increase their productivity
human capital
all gifts of nature, such as bodies of water, trees, oil reserves, minerals, even animals
natural resouces
can be drawn on indefinitely if used conservatively, ex timber
renewable resource
does not renew itself and is available in a limited amount, ex oil and coal
exhaustible resource
special kind of human skill, the talent required to dream up a new product or find a better way to produce and existing one
entrepreneurial ability
a profit-seeking decision maker who starts with an idea, organizes an enterprise to bring that idea to life, and then assumes the risk of operation
entrepreneur
equals the revenue from items sold minus the cost of the resources needed to make items
profit
something you can see, feel, and touch; it requires scarce resources to produce, and it satisfies human wants
good
intangible yet it uses scarce resources to satisfy human wants
service
A good or service is scarce is the amount people desire ________ the amount available at a zero price
exceeds
occurs when the amount people desire exceeds the amount available at a zero price
scarcity
TINSTAAFL
There is no such thing as a free lunch
Four types of economic decision makers
households, firms, governments, rest of the world
the means by which buyers and sellers carry out exchange; determine price, quantity, and quality
markets
a market in which a good or service is bought and sold
product market
a market in which a resource is bought and sold
resource market
a diagram that traces the flow of resources, products, income, and revenue among economic decision makers
a simple circular flow model
the study of the economic behavior in particular markets, such as that for computers or unskilled labor; examines individual economic choices
microeconomics
the study of the economic behavior of entire economies, as measured,, for example, by total production and employment
macroeconomics
a simplification of reality used to make predictions about cause and effect in the real world
economic theory, or economic model
