H - Econ. Chaps 1-4 Flashcards
The creation / addition of utility
Production
Ability of the good / service to satisfy a want
Utility
The sum of all goods and services produced by an economy over a given time
Total product
The allocation of the total product among the productive resources
Distribution
All natural, synthetic, and human inputs that are used in creating goods and services
Productive Resources
Study of how people and institutions within a society make choices and how these choices in turn determine the use of society’s scarce resources
Economics
The time and effort expended by human being
______
All the resources of the land, sea, and air
being
______
Goods used to produce other goods and services
______
The act of organizing and suing the risks of a business venture
______
Labor, land, capital, and enterprise
A person who organizes and assumes the risks of a business venture .
Combines the oath productive resources (LLC) to produce a final product
Entrepreneur
What are the problems of distribution?
Market Economy comprised of:
Wages, rent, interest profits.
It’s a barter economy
The use of a good or service.
May be the most important functions economics because it’s the ultimate end result of economic activity
Consumption
Economic goods and services are what 3 things?
Useful, scarce, and transferable
Difference between a service and a good?
Services are intangible
Goods have a utility and satisfy a want to be economic goods
Type of good:
Lacks the element of scarcity and therefore has no price
Free good
Type of good:
An economic good to the supplier but a fee good to the user
Public good
Type of good:
Goods directly used by individual,s households, and businesses
Consumer goods
Things of value owned at a particular time
Wealth and Income (Stock and Flow)
The stock of labor talents and skill use to increase productivity
Human Capital
The total value of the goods and services produced over a period of time
Total Income
An organized boy of knowledge that is coordinated, arr., and systemic ex according to general laws or principles
Science
A study of behavior and interaction of human beings, individually and in groups
Economics
Difference between economic theory vs. economic policy
E. Theory - Develops rules and principles of economics and is a guide for action under a given set of circumstances
E. Policy - Action actually taken under a given set of circumstances
Difference between Positive and Normative Economics
Positive - Scientific study of “what is” among economic relationships
Normative - Area dealing w/ “what ought to be”
The value of 1+ or 1- unit, opportunity cost
Marginal Analysis
A supposition that something is true without proof
Assumption
Action consistent with a given goal
Rational Behavior
A position of stability or rest where the qty. supplied equals the qty. demanded
Equilibrium
An action that is beneficial to an individual may not be beneficial if done by a group
Fallacy of Composition
Saving by individuals or families is desirable for it increases capital formation, but if a large no. of people
Paradox Shift
When government compensates for individuals and firms for large-scale losses it creates a climate of greater risk and losses in future
Moral Hazard
What lies at the heart of economics and is the driving force for business choices?
Scarcity
Most of us must make decisions as to how to spend our money to
Maximize our satisfaction due to our limited resources
Choices of businesses are restricted by…
Competition
Government Regulations
Production Costs
Tech
On a national level policy makers must also make important economic decisions that reflect
Costly alternative
The total output and standard of living of any nation depend on the extent of the nations
Labor
Land
Capital
Enterprise
Shows the alternative combinations of different goods and services that a society can produce given its available resources and tech
Production Possibilities Curve
The value of the next best alternative that must be sacrificed when a choice is made
Opportunity Cost
True or False
The production possibilities curve can be curved inward or outward
False
It is ALWAYS curved Outward
If you are inside the curve of the production possibilities could mean
That you are inefficient, experiencing natural disasters, or etc.
Increasing total output and profits would be a way to cultivate
Economic Growth
True or False
The U.S. has an excellent combination of the resources
True
Labor - Skill, versatile mobile
Land - Plentiful supply of land and natural resources
Capital - Greats amount of capital in the world
Enterprise - Entrepreneurial skills
Some areas of the world lack proper ____ of land, labor, and capital required to high level production
Ratio
Process of limiting the scope of an economic units productive efforts instead of trying to produce everything it needs
Specialization
The process of trading surplus
L
Ability to produce a good or service using fewer resources than other producers use
Absolute advantage
The ability to produce a good or service at a lower opportunity cost than other producers face
Comparative advantage
Main questions of macroeconomics
- What goods and services to produce, and what quantities?
- How are goods/services produced?
- Who gets what is produced?
- The incentive for obtaining and using resources to produce goods and services that consumers will buy
- The excess of revenue over all costs of production
Profit
In a ____ situation the producer by using resources to make a profit increases the well-being of other people
Model
In an economic system the ultimate use of ____ and other resources and the ______ of goods/services are determined primarily by consumer demand
Labor, allocation
Individuals express their through what for Goods/Services
Prices
The opportunity to make profits is a(n) ____ for business to produce goods/services
Incentive
For payments business obtain the revenue they need to purchase the ___,____,____ necessary for producing more goods/services
Labor, land, capital
Rivalry among individuals and firms for sales to consumers
The natural regulator that makes the free market system
It protects customers from shoddy products
If it is effective the economy functions efficiently without overseer
Competition
Chap. 3.
The role of prices
Allocate resources
Prices ration consumer demand
4 Major forms of business organization
Sole Proprietorship -Business owned by 1 person
Partnership - Business owned by 2+ people
Corporation -Separate legal entity apart from its owners or shareholder which functions as a business
Cooperatives -Business owned by the people who use it or buy from it
Producers in a market economy seek the business of individual buyers by…
Underprice firms
Putting out a better product
Giving better service
Government-Regulate Markets
Public Utilities Airlines Agricultural markets Banking Industry Number of taxicabs in. Cities Number of establishments that can serve alcoholic beverages
Economy that contains a mixture of perfect and imperfect competition no of regulated and unregulated industries
Mixed Economy
The U.S. is a primary example
The removal of government regulations to better help competition
Deregulation
The quantity purchased of a g/s is inversely related to the price all other things being equal
Law of supply and demand
Quantities of a g/s at a specific price over a give period of time
Quantity of demand
A schedule of the total quantities of a g/s that purchasers will buy
Demand ?? Check chap 4
The quantity of a good or service that an individual or firm stands ready to buy at various prices at a given time
Individual demand
The sum of the individual demands in the marketplace
Market demand
A table showing the various quantities of a g/s
Demand schedule
Check chap 4
Demand Curve
Movement along the demand curve which occurs
Cha
Determinates of Demand
Changes in Income Changes in tastes and preferences Changes in the prices of elated goods and services -substitutes -compliments
Total qty. of g/s that sellers stand ready to sell at a different prices in a give time
Supply
The specific amount that a seller would be willing to offer for sale at a particular price
Qty. Supplied
Determinants of Supply
Changes in the cost of resources
Changes in Tech/(efficiency)
Expectations of future prices
Prices of related products
The price at which quantity demand and quantity of supplied
Equilibrium
