Leeson 1 Flashcards
Durable good
an item that lasts three years or more when used on a regular basis. (Car,, tools, washing machine, etc)o
Non durable good
an item that lasts fewer than 3 years when used regularly. (Food, paper, and most clothing
Consumer good
goods bought and used by individual consumers (shoes, shirts. Automobile, etc)
Capital good
a tool or good used to produce other goods. (Machines, wood, steel, plastic, etc)
Services
work or labor performed by someone (haircut, car repair, entertainment, etc)
Goods are __________(something that can be touched), _________ are not (intangible)
Tangible
Intangible
Value
What determines value
the monetary worth of a good or service
• the cost that someone is willing to pay for something
Paradox of value
contradiction between the high values of a nonessential items (diamonds) and a low value of an essential item (water)
Adam smith
The wealth of Nations, argued that for something to have value it must be
father of capitalism) in his book, The wealth of Nations, argued that for something to have value it must be scarce and have utility (worth)
This is the solution of the paradox of value:
- diamonds are scarce and have utility (worth)
* Water has utility but is not scarce (in most places - not valuable
two factors that determine value.
Scarcity and Utility
Wealth
the accumulation of products that are tangible, scarce, and have utility
• a nations wealth comprises all ______ items (natural resources) factories, stores, houses, hotels, etc
Tangible
• Goods are counted as _______ but services are ____
• Goods are counted as wealth but services are not
• because resources are ______, everything has a ____ - even when it seems we’re getting something for _____
• because resources are limited, everything has a cost - even when it seems we’re getting something for free
TINSTAAFL
there is no such thing as a free lunch
*most things in life are not free, someone has to pay for them
What are the economic basic choices faced by all societies?
- What to produce- decision made by the gov or the people
- How to produce it - more automated machines, robots or more workers? Must weigh the costs
- For whom to produce it for?
Goods
useful tangible item (physical item) that is used to satisfy a need or a want. (Book, car, iPad, etc
Two types of economic products
Services and goods
Need
basic requirement for survival. (Food, clothing, shelter)
Want
something we would like to have, but is not necessary for survival (computer, cell phone, etc)
Microeconomics
is they study of individuals, households, and companies behavior in decision making and allocation of resources. It generally applies to markets of goods and services and deals with individual and economic issues.
Macroeconomic
is the branch of economics that studies the behavior and performance of an economy as a whole. (City, nation, global) It focuses on the aggregate changes in the economy such as unemployment, growth rate, gross domestic product, and inflation. Things that apple to the whole nation
__________ looks at how the economy works as a whole
Macroeconomic
Scarcity
the condition that results from society not having enough resources to produce all the things that people would like to have (wants, needs)
- What to produce?
- How to produce?
- For whom to produce?
Economics
the branch of knowledge concerned with the production, consumption, distribution of good and services, and the transfer of wealth.
• the study of people and the choices they make
