Economics Unit 1 Flashcards
microeconomics
focuses on individual decision-making units and how they interact
macroeconomics
explores the economy as a whole
scarcity
the fixed amount of goods or services available
mixed economy
an economy which practiced characteristics of both command and market economies; supply and demand largely influence the economy, but there is government intervention to meet certain economic goals
opportunity cost
the cost of choosing; what you give up by choosing one option
endowment
natural and human resources from which all goods and services must be produced
-finite, but not fixed
traditional economy
an economic system in which traditions, customs, and beliefs help shape the goods and services the economy produces, as well as the rule and manner of their distribution also referred to as a subsistence economy, a traditional economy is defined by bartering and trading
command economy
an economic system in which the means of production are publicly owned and economic activity is directed by a central government or portion of the government
market economy
an economic system in which the forces of supply and demand determine what goods and services are produced
goods
objects that can fulfill human wants/needs, provide utility
services
economic activity that is intangible; provides utility, but cannot be stored
profit motive
the tendency of people to engage in activities that will lead to monetary gain
consumer sovereignty
the economic power of the individual in a free market
government regulation
requirements the government places on private firms and individuals to achieve the government’s goals
marginal utility
additional increment of utility associated with consuming one more unit of a good or service
margin
in a succession of units, the specific unit you are focusing on
total utility
the total satisfaction derived from consuming a specific quantity of a good or service; the total of marginal utilities for all individual units consumed
satiate
satisfy
initial decision
over-simplified decision-making process based on utility
bliss point
maximization of utility
marginal analysis
evaluating the impact of one additional unit
util
a measure of utility
diminishing marginal productivity
initially, one input increases the initial successive units of input toward the output, but eventually this will add to less output
balancing at the margin
maximizing utility in light of scarcity
