Microeconomics Week 1 Flashcards
Activity of making, providing, purchasing, or selling goods or services.
Economic activity
Any action that involves producing, distributing, or consuming products or services is an _______.
Economic activity
Activities exist at all levels within a society. Additionally, any activities involving money or exchange of products or services are ______.
Economic activities
Levels of economic activity
Primary sector, secondary sector and tertiary sector
Provides services to consumers and the other sectors of industry
Tertiary sector
Manufactures goods using the raw materials provided by the primary sector
Secondary sector
Extracts and uses the natural resources of the earth
Primary sector
Basic Economic Activities
Production, Consumption, Employment and Income Generation
The use of economic resources in the creation of goods and services for the satisfaction of human wants.
Production
The using up of goods and services by consumer purchasing or in the production of other goods.
Consumption
The use of economic resources in productions; engagement in activity.
Employment
The production of maximum amount an individual can spend during a period without being any worse off.
Income Generation
As spending for acquisition of utility, major concept in economics and is also studied in many other social sciences.
Consumption
It is seen in contrast to investing, which is spending for acquisition of future income. Different schools of economist define _____ differently.
Consumption
Relationship between two parties, based on contract where work is paid for, where one party, which may be a corporation, for profit, not-for-profit, organization, co-operative.
Employment
Other entity is the employer and the other is the employee.
Employment
Derivative transaction involving the writing of covered options, caps, or floors that is intended to generate income or enhance return.
Income generation
Factors of production
Land, Labor, Capital and Enterprise
Solid surface of Earth that is not permanently covered by water.
Land
Majority of human activity throughout history has occurred in ___ areas that support agriculture, habitat, and various natural resources.
Land
Labor pool in employment, generally used to describe those working for a single company or industry, but can also apply to a geographic region like a city, state or country
Labor, workforce or labor force
Types of Labor
Unskilled Labor, Semi-skilled labor, Wage Employees and Contract Labor
Does not require training
Unskilled Labor
Requires some education or training
Semi-skilled Labor
Supervised by a boss
Receive a set weekly or bi-weekly wage as well as benefits
Wage Employees
A contract specifies the work to be produced
The amount is paid either commission or a set fee for the work
Benefits are not paid
Contract Labor
Term for financial assets, such as funds held in deposit accounts and/or funds obtained from special financing sources.
Capital
Can also be associated with ____ assets of a company that requires significant amounts of capital to finance or expand.
Capital
Person who combines the other economic resources for use in the production of goods and services.
Entrepreneur
Decides on the combination of land, labor and capital to be used in production.
Entrepreneur
Price income is earned by the entrepreneur and is called profit. Amount that is left behind after all allocations to the other economic resources have been made.
Entrepreneurship
The economic problem
What to produce, how to produce and for whom to produce
Problem related to the selection of goods and services to be produced.
What to produce
Has to decide whether to produce consumer goods such as rice, wheat, clothes, etc. or to produce capital goods such as machinery and equipment.
What to produce
Refers to selection of technique to be used for production of goods and services.
How to produce
Goods can be produced using different techniques of production. By ‘technique’, we mean which particular combination of inputs to be used.
How to produce
An economy has to allocate its resources and choose from different potential bundles of goods, select from different techniques of production, and decide in the end who will consume the goods.
For whom to produce
Four types of economic system
Mixed, traditional, command and market
Relies on customs, history, and time-honored beliefs.
Traditional economy
Societies with ______ depend on agriculture, fishing, hunting, gathering or some combination of them. They use barter instead of money.
Traditional Economy
An economic system in which the decisions regarding investment, production and distribution are guided by the price signals created by the forces of supply and demand.
Market economy
A system where the government, rather than the free market, determines what goods should be produced.
Command economy
How much should be produced, and the price at which the goods are offered for sale. It also determines investments and incomes.
Command economy
Defined as an economic system blending elements of planned economies, free markets with state interventionism, or private enterprise with public enterprise.
Mixed economy
Characteristics of Mixed Economy
Co-existence of public and private sector
Existence of economic planning
Role of price system and government directives
Government regulation and control over private sector
Consumers sovereignty protected
Government protection of labor
Reduction of economic inequalities
