Economics And Economic Decision Making Flashcards
Economics
Study of how a society uses its scarce resources to produce and distribute goods and services
Economy
Sum total of all economic activity within a given region
Microeconomics
Study of how consumers, businesses, and industries collectively determine the quantity of goods and services demanded and supplied at different prices
Macroeconomics
The study of “big picture” issues in an economy, including competitive behavior among firms, the effect of government policies, and overall resource allocation issues
Factors of production
Natural resources Human resources Capital Entrepreneurship Knowledge
Natural resources
Land, forests, minerals, water, and other tangible assets useable in their natural state
Human resources
All the people who work on behalf of the organization
People and their individual talents and capacities
Capital
The funds that finance the operation of a business as well as the physical, human-made elements used to produce goods and services, such as factories and computers
Entrepreneurship
Combination of innovation, initiative, and willingness to take the risks required to create and operate new businesses
Knowledge
Expertise gained through experience or association
Scarcity
Condition of any productive resource that has finite supply
Opportunity cost
The value of the most appealing alternative not chosen
Why scarcity is important
Creates competition for resources and forces everyone to make trade offs
Essential to economic decision making
4 Macroeconomic Issues Essential to Understanding the Behavior of the Economy
Competition
Economic cycles (expansion & contraction)
Unemployment
Inflation
