Final Flashcards
Economics
the study of how people try to satisfy what appears to be seemingly unlimited and competing wants through the careful use of relatively scarce resources
Scarcity
the condition that results from society not having enough resources to produce all the things people would like to have
The Factors of Production (4)
- Land
- Capital
- Labor
- Entrepreneurs
Entreprenuer
a risk taker in search of profits who does something new with existing resources
Division of Labor
work is arranged so that individual workers do fewer tasks than before
Specialization
factors of production perform tasks that they can do relatively more efficiently than others
Trade-Offs
alternative choices whenever people make an economic decision
Opportunity Cost
the cost of the best alternative use of money, time, resources when one choice is made rather than another
Production Possibilities Frontier
a diagram representing various combos of goods and/or services an economy can produce when all productive resources are fully employed
Traditional Economy
the allocation of scarce resources, and nearly all other economic activity, stems from ritual, habit, or custom
Command Economy
a central authority makes most of the WHAT, HOW, and FOR WHOM decisions
Market Economy
people and firms act in their own best interests to answer the WHAT, HOW, and FOR WHOM questions
Economic Freedom
people are able to choose their occupations, employers, and uses for their money
Private Property
people can own and control their property
Voluntary Trade
the acts of buyers and sellers freely and willingly engaging in market transactions
Profit Motive
the driving force that encourages people and organizations to improve their material well-being
Competition
the struggle among sellers to attract consumers while lowering costs
Law of Demand
states that the quantity demanded of a good or service varies inversely with its prices
Law of Supply
states that suppliers with normally offer more for sale at all possible prices that could prevail in the market
Demand Elasticity
the extent to which a change in price causes a change in the quantity demanded
Total Cost
the sum of the fixed and variable costs
Fixed Cost
the cost that a business incurs even if the plant is idle and output is zero
Variable Cost
a cost that changes when the business rate of operation or output changes
Surplus
a situation in which the quantity supplied is greater than the quantity demanded
