Economics Basics Vocab Flashcards
Command economy
govt. makes all the economic decisions
Carl Marx
wrote Das Kapital
[capitalists exploit (take advantage of) the workers]
Adam Smith
wrote a book called Weath of Nations
explains principals of capitalism
Capital
investment goods that aid the production process
Labor
Human resources = labor
*physical/mental talents of people which help produce goods & provide services
(includes entrepreneurial ability)
Efficiency
producing the max possible output from available resources
Consumers
People who buy/purchase goods & services
Inflation
general rise in price of goods & services
Macro-economics
Concerned w/ economy as a whole or w/ basic subdivisions
Micro-economics
Concerned w/ specific economic units & detailed consideration of the behavior of these units
Entrepreneurs
Risk takers who start businesses
Opportunity cost
value of the best alternative that you must pass up
can be measured in $$
Production Possibility Curve
Shows possible combinations of the 2 types of goods/services that can be produced when available resources are employed fully & efficiently
Law of demand
if price (P) goes up, demand (D) goes down if P goes down, D goes up [**inverse relationship]
Law of supply
as P goes up, supply (S) goes up
as P goes down, S goes down
[**direct relationship]
Gross Domestic Product
measures the amount of goods/services an economy produces within a year
Standard of living
the amount of goods/services that can be purchased & the amount of leisure time
Shortage
More demand than supply - not enough product to meet people’s wishes
Surplus
More product than needed - quantity produced is
greater than what people wish to buy
Economics
Social science concerned w using scarce resources to obtain maximum satisfaction of the unlimited human wants of society
Market economy
individual consumers & producers make the basic economic decisions based on supply & demand
