Economics Chapter 1 Flashcards
Economics-
The branch of knowledge concerned with the production, consumption, distribution, of goods and services and the transfer of wealth. ( the study of people and the choice they make)
Microeconomics
Is the study of individuals, households, and companies behavior in decision making and allocation of resources.( it generally applies to market of goods and services and deals with individual and economic issues
Macroeconomic
Is the branch of economic that studies the behavior and performance of an economy as a whole( city nation global) it focuses on the aggregate changes in the economy
Scarcity
The condition that results from society not having enough resources to produce all the things people would like to have (wants and need(
Scarcity lead to what choices
1 what to produce?
2 how to produce?
3 for whom to produce?
Two types of economic products
1 goods: a useful tangible item that is used to satisfy a need or a want(physical item)
2 services: work or labor performed by someone
Goods are tangible can be touched
Services are not tangible( intangible)
4 types of goods
Durable good
Non durable good
Consumer good
Capital good
Durable
An item that lasts 3 years or more when used on a regular basis( car tools washing machine)
Non durable
An item that lasts less than 3 years when used regularly( food, clothes, paper)
Consumer
Goods bought and used by individuals consumers( shoes shirts, automobiles
Capital
A tool or good used to produce other goofs( machines, woods, steel, plastic)
Value
The monetary worth of good or services
What determines value
The cost that someone will pay for something
Paradox value
A contradiction between the high values of non-essential items
(Diamonds) and a low value of an essential item (water)
Adam smith
(Father of capitalism) for something to have value it must be scarce and have utility(worth)
Solution of the paradox
Scarcity and utility are two factors that determine value
Wealth
The accumulation of products that are tangible, scarce, and have utility
TINSTAAFL
There is no such thing as a free lunch( there is a cost somewhere)
Why are the economics basic choices are faced by all societies?
- What to produce
2 how to produce
3 for whom to produce
What to produce
Decisions is made either by gov( North Korea) or by the consumer( USA)
How to produce
More automated machines, robots, or more workers? Must weigh the cost
For whom to produce it
Housing? Low income or high income
Our economy is made of 2 broad groups
Producers, consumers
Producers
Person, company, or country that makes, grows, or supplies goods or commodities for sale
Producers need( factors of production)
1 land
2 capital
3 labor
4 entrepreneurs
Land
Natural resources
Capital.
Money, tools, equipment, machinery
Labor
People, workers
Entrepreneurs
Individual risk takers
Opportunity cost
The cost/value of the next best alternative given up(money, time, resources)
Ever decision we make has…
Trade offs
Trade off s
Alternative choices that must be given up in a favor of the choice we select
Consumer
A person who purchases goods and services for personal use
Consumer rights that protect the against producers
The right to 1 safety 2 be informed 3 choose 4 heard 5 redress
Consumerism
1960s the social movement was an attempt to educate buyers about purchases they make and demand better and safer products
