Chapter 1.1 Flashcards
Social sciences
Academic disciplines that study human society and social relationships
Microeconomics
Examines the behavior of individual decision-making units in the economy
Macroeconomics
Examines the economy as a whole to obtain a broad or overall picture of the economy
Efficiency
Making the best possible use of scarce resources to avoid resource waste
Allocative efficiency
When resources are used to produce the goods and services that mostly satisfy society’s needs and wants
Equity
The idea of being fair or just
Economic well-being
The level of prosperity, economic satisfaction and standards of living among the members of a society
Sustainability
Refers to maintaining the ability of the environment and the economy to continue to produce and satisfy needs and wants into the future
Interdependence
The idea that economic decision-makers interact with and depend on each other
Intervention
Refers to government intervention, meaning that the government becomes involved with the workings of markets
Resources
The inputs used to produce goods and services wanted by people, also known as factors of production
Scarcity
The situation in which available resources, or factors of production, are finite, whereas wants are infinite. There are not enough resources to produce everything that human beings need and want
Economics
The study of choices leading to the best possible use of scarce resources in order to best satisfy unlimited human needs and wants
Sustainable resource use
The preservation of the environment over time
Four factors of production
Land, labor, capital, entrepreneurship
Land
Consists of all natural resources, including agricultural and non-agricultural land, as well as everything that is under or above the land
Labor
The physical and mental effort people contribute to the production of goods and services
Capital
A man-made factor of production used to produce goods and services
Entrepreneurship
A special human skill possessed by some people, involving the ability to innovate by developing new ways of doing things, to take business risks and to seek new opportunities for opening and running a business
Human capital
The skills, abilities and knowledge acquired by people, as well as good levels of health, all of which make them more productive
Opportunity cost
The value of the next best alternative that must be sacrificed to obtain something else
Free good
Any good that is not scarce, and therefore has a zero opportunity cost
