Chapter 1 Flashcards
Resource inputs used to produce goods and services such as land, labor, capital and entrepreneurship
Factors of production
Final goods produced for use in the production of other goods, such as equipment and structures
Capital
The assembling of resources to produce new or improved products and technologies
Entrepreneurship
The study of how best to allocate scarce resources among competing uses
Economics
The most desired goods or services that are forgone to obtain something else
Opportunity cost
The alternative combinations of final goods and services that could be produced in a given time period with all available resources and technology
Production possibilities
Maximum output of a good from the resources used in production
Efficiency
An increase in output (real GDP); an expansion of production possibilities
Economic growth
The use of market prices and sales to signal desired outputs (or resource allocations)
Market mechanism
The doctrine of “leave it alone” of nonintervention by government in the market mechanism
Laissez faire
An economy that uses both market signals and government directives to allocate goods and resources
Mixed economy
An imperfection in the market mechanism that prevents optimal outcomes
Market failure
Government intervention that fails to improve economic outcomes
Government failure
The study of aggregate economic behavior, of the economy as a whole
Macroeconomics
The study of individual behavior in the economic, of the components of the larger economy
Microeconomics
