Economics And Economic Activities Flashcards
Economics
The study of how to meet unlimited, competing wants with limited resources
Free goods
Do not involve the exchange of money
Economizing
The process of deciding which goods and services to purchase or provide so the most satisfaction can be obtained
Opportunity cost
When a choice is made about the best use of resources, the next best alternative is that is given up is called the opportunity cost
Trade-offs
Individuals, businesses, and governments must be willing to give up all or part of one thing in order to get something else
Decision making
Choosing among alternatives
What are the four economic activities
Consumption, production, exchange, and distribution
Consumption
The process or activity of using goods and services
Production
Goods and services being produced
Exchange
Formal exchange between individuals based on contacts specifying the exact amount to be exchanged
Ex. Getting paid a salary
Resource owners
People and organizations who provide human resources, natural resources, or capital goods for use in production
Distribution
Process or activity by which income is divided among resource owners and producers
The variety of factors that values attached to money payments depend on
Productivity, demand, availability or supply
Gross profit
Money left after the cost of goods expenses is subtracted from the total income.
The profit
Income from sales - cost of goods = gross profit
Net profit
Money LEFT OVER AFTER SUBTRACTING EVERYTHINGG
Money left after the cost of goods expense and operated expenses are subtracted from total income
Gross profit - operating expense = net profit
