microeconomics scarcity and choice vocab Flashcards
economics
the study of how societies allocate their scarce resources
microeconomics
the study of the behaviour of individuals and groups within an economy
scarcity
wants are unlimited/infinite bur resources are limited/finite
factors of production
the resources used by firms in the production process. they are the inputs to the production process
land
all the natural resources e.g. coal, forests, rivers, soil, minerals, sea. economic activity uses both renewable and non renewable resources - receive rent
labour
workforce of the economy. the physical and mental effort expended by humans. the quality of each human is unique with different characteristics, skills, knowledge - receive wage
capital
man made resources not wanted for their own sake but for what they contribute to output e.g. factories, machine - receive interest for their services
enterprise
decision making and risk taking factor, the ability to bring all the factors of production together, take risks to - receive profit
entrepreneur
develops the idea and organised the 3 factors of production, humans that take risks but not for wages
want
we desire but can live without
need
necessary to survive e.g. warmth, shelter, food, clothes, water
economy
a system that seeks to deal with the basic economic problem and allocate scarce resources
opportunity cost
the satisfaction lost from the next best alternative foregone
free goods
a good that has no opportunity cost/doesn’t require a sacrifice
prediction possibility frontier
a diagram that illustrates the maximum amount of one good that can be produced given a certain amount of another good, when all resources are being fully and efficiently utilised
positive economics
dealing with the objective or scientific explanations of the working ‘economy’
normative economics
dealing with prescriptions or recommendations based on personal value judgements (a state of opinion or beliefs)
factor rewards
the incomes that flow to each of the main factors of production when there are brought into productive use
market economy (capitalist system)
the factors of production are controlled and regulated by private businesses
command economy (planned economy)
financial decisions are made according to government plans
mixed economy
an economic system that combines elements of both capitalism and socialism
economic goods
a good or service that has a benefit to society and satisfies human wants
trade-off
any situation where making one choice means losing something else, usually forgoing a benefit or opportunity
productivity
how much output can be produced with a given set of inputs
economic problem
the fundamental problem facing all societies
specialisation
a situation where individuals or firms or regions or nations concentrate upon producing a small range of goods and services
division of labour
occurs when the production process of a good or service is divided into a number of individual operations and each operation is the special task of the worker
subsistence economy
each individual produces enough to survive, no leisure and goods. seen in the past
