Chapter 1 Flashcards
economics
how people use “scarce” and “limited” resources to satisfy wants and needs.
need
basic requirement for survival.
want
a way of expressing a need.
scarcity
limited in quantity, desired, multi useful.
utility
amount of usefulness or satisfaction we get from something.
marginal utility
extra amount of enjoyment we attain from something.
diminishing utility
as consumers we appreciate something less and less as we attain more.
TINSTAAFL
there is no such thing as a free lunch.
opportunity cost
cost of “next best” alternative use of money, time, or resources.
microeconomics
studying decision making of small groups or individual.
macroeconomics
studying decision making of large groups or population..
three basic questions for communities/nations
what to produce, how to produce, for whom to produce
four categories of factors of production
land, labor, capital, entrepreneurs
land
gifts of nature
labor
workers and their skills
capital
the tools, machines, equipment, and factories used to produce good and services.
entrepreneurs
risk takers who start businesses
good
economic product that is tangible and satisfies a want or need.
service
work performed for structure
consumer
ones who buy goods and services
value
monetary expression of an item in money
how to determine value
scarcity and how much item is desired
capital goods
things that can be used to make consumer goods
consumer goods
stuff you buy to use for yourself
durable goods
items that last three years or more
non durable goods
items that last less than three years
wealth
accumulation of products that are tangible, scarce, useful
and transferable from one person to another.
comparative advantage
the ability to produce something at a lower opportunity cost than other products.
law of comparative advantage
an individual firm, or region with the lowest opportunity cost of producing a good or should specialize in that good.
absolute advantage
ability to produce something using fewer resources than other producers.
