econ Flashcards
scarcity
when unlimited wants exceed limited productive resources ( You want more than you have the supplies to make)
Goods
Physicals Objects
a product that is useful, relatively scarce (limited), and “sellable”
Used to satisfy needs and wants
Services
work or service performed for another person
ex: haircut
Factors of Production
The 4 categories that make up the productive resources ( Land, Labor, Capital, Entrepreneurship
Allocate
to distribute resources for a particular purpose
Trade-Offs
all the possible opportunities in a situation
Opportunity costs
the value of the next best thing given up when someone is forced to make a choice due to scarcity
Ex: you can have McDonalds or Burger King for dinner
Cost-Benefit Analysis
way of thinking that compares the cost of an action to its benefit
Marginal cost
extra cost of producing one additional unit of production
Marginal Benefit
the benefit you get from consuming an additional unit and the amount of money a consumer is willing to pay for an additional unit
Rational Decision Making
a process for making decisions between trade-offs or alternative choices
Specialization
also known ad Divison of Labor
person is assigned a specific task to perform less function more frequently
Division of Labor
Separation of work into multiple tasks to be performed by different workers
Also known as specialization
Voluntary Exchange
the act of buyers and sellers freely and willingly engaging in market transactions
Efficiency
doing a job the most effectively with as little time and resources/cost as possible
3 Economic Questions
What to produce?
How to produce?
For whom to produce?
Traditional Economy
economic system where the allocation of scarce resources and other economic activity is the results of ritual, habit, or custom
Command Economy
economic system where the central authority (gov’t) make most of the major economic decisions
Market Economy
Economic system where supply, demand, and the price system help people make decisions and allocate resources
*Also known as Free Enterprise
Capitalism
An economic system where private citizens own and use factors of production to make profit
Mixed Economy
Also known as Modified Private/Free Enterprise Economy
People control economic affairs freely, but are subject to
Private Ownership
when things are owned by individuals, groups, or businesses
consumer sovereignty
the role of the consumer to rule the market when determining the types of goods and services to produce
competition
the struggle between sellers to attract consumer while lowering costs
regulation
a rule or directive given by a person in authority, typically the gov’t
Deregulation
the government removes or relaxes some of its regulations (rules) on business activites
redistribution of wealth
the government taking resources from those who have more and giving them to those who have less
standard of living
quality of life based on the ownership of necessities that make life easier
*housing, healthcare, education
