General Terms and Definitons Flashcards
(19 cards)
Define Economics
Economics is the study of solving the problem of how to allocate SCARCE RESOURCES that have alternative uses so as to maximize SATISFACTION of consumers NEEDS and WANTS.
What conditions are needed for Economics?
Scarcity/Limited Resources and Unlimited Wants
What economic decisions are needed?
What to produce.
What resources are to be used.
How they are produced.
Who to get the goods.
What are needs?
Things individuals must have satisfied in order to sustain life. Everyone has needs but in many cases, they are not always satisfied with disastrous results.
What happens if needs are not met.
Long Term - You will die.
What are wants?
Wants are desires individuals would like to have satisfied but are not necessary to sustain life.
- Wants are unlimited.
What are limited means (scarcity)?
The condition of limited resources relative to wants.
What is opportunity cost?
Opportunity cost is the next best alternative FOREGONE when a decision is made. (The second ranked alternative given up when a choice is made.)
What are our needs?
Food, Water, Clothing and Shelter.
What are luxury goods?
They are goods we want to have to make life better but not essential for our needs.
What are our limited means?
Time, Money, Skill and Family.
What are basic goods?
Are goods that are essential for our needs.
What is choice?
A choice is a decision between various alternatives when you have limited means.
What are the two Differences between wants + needs?
Needs are needed to sustain life where as wants are not. Needs are limited whereas wants are unlimited.
What is the definition of supply?
The quantity if a good or service that a producer is both willing and able to provide at a range of given prices within a period of time.
What is a supply schedule?
A table that sets out the quantity if a good or service that a producer is both willing and able to provide at a range of given prices within a period of time.
What is a supply curve?
A graph that sets out the quantity if a good or service that a producer is both willing and able to provide at a range of given prices within a period of time.
What is the definition of the law of supply?
As the price rises the quantity supplied will increase or vise versa assuming ceterus parabus.
What does willing and able mean in terms of supply?
Willing = The producer wants to produce the good or service. Able = They have the means to produce them: Land, Capital, Labour, Entrepreneurship.
