Chapter 1 Flashcards
Economics
The study of the allocation of scarce resources to produce the goods and services that will satisfy the unlimited wants & needs of an individual.
Market
Anytime, any place buyers & sellers come together to exchange g/s at a mutually agreed upon price.
3 questions that all societies must answer
1) What to produce?
2) How to produce?
3) Who gets it?
[What, How, & For Whom]
Incentive
A reward that encourages an action or a penalty that discourages one.
Scarcity
Our inability to get everything we want.
Micro-Economics
The study of the choices that individuals and businesses make, the way these choices interact in markets, and the influence of governments.
Macro-Economics
The study of the performance of the national economy and the global economy.
Goods and Services
The objects that people value and produce to satisfy wants. Goods are physical objects and services are tasks performed for other people.
Factors of Production (4 of them)
1) Land - the gifts of nature that we use to produce g/s
2) Labor - the work, time and effort put into producing g/s
3) Capital - the tools, instruments, machines, buildings and other constructions used to produce g/s
4) Entrepreneurship - the human resource that organizes labor, land & capital
Human Capital
the quality of labor depends on this, which is the knowledge and skill that people obtain from education o-t-j experience and work experience.
Tradeoff
an exchange- giving something up for something else
Rational Choice
a choice that compares costs and benefits and achieves the greatest benefit over cost for the person making the choice.
Opportunity Cost
The opportunity cost of something is the highest valued alternative that must be given up to get it.
Margin
choice between 2 things
Marginal Benefit
The benefit that arises from an increase in an activity
