Midterm Flashcards
Deciding whether to do or use one additional unit of some resource
Thinking on the margin
A phrase that refers to the trade-offs governments face
Guns or Butter
An ambitious leader who creates new goods or services
Entrepreneur
All human made goods that are used to produce other goods
Physical capital
The effort that people devote to a task
Labor
Physical objects (food, phones, etc.)
Goods
An item that we desire but is not essential to live
Want
The common sense science of how and why people, businesses, and governments make the choices they do
Economics
Anything that is finite or limited in quantity
Scarcity
Using wisely and well what God has given
Stewardship
Determined due to the nature of the product
Intrinsic value
Also known as a schedule and a popular method of explaining simple relationships between pairs
Tabular model
Contains a horizontal and vertical axis
Line graph
Provides a complete visual explanation of how a complete economic system functions
Circular Flow Model
Land, labor, capital and entrepreneurship
Factors of production
The payment made on borrowed money
Interest
When government spending exceeds what it receives in taxes
Budget deficit
The difference between revenues received and costs that go into production
Profit
All payments for labor
Wages
The activity of creating new and useful goods and services
Consumption expenditures
Household spending on goods and services
Principle of Diminishing Marginal Utility
A graph that shows an alternative way(s) to use an economy’s resources
Production Possibilities Curve
The willingness of consumers to purchase the products and the actual act of purchasing it
Demand
Goods that experience an increase in demand because of an increase of consumer incomes
Normal Goods
Goods that households use in place of others
Substitute Goods
Goods that are usually purchased or used together
Complementary Goods
Items that see a decline in sales as consumer income increases
Inferior Goods
When a demand curve shifts to the left or right
Change in Demand
When the government dictates that the price may not rise any higher
Price Ceiling
A barrier that prevents prices from falling below the market price
Price Floor
The price at which consumers are willing to take from the market; the exact quantity of a product that suppliers that will put in the market
Market Equilibrium Price
Supply fluctuations (Up or Down)
Change in Supply
What is the difference between an economic cost and an opportunity cost?
- Economic cost- the value people place on a good or service and is reflected by its price
- Opportunity cost- the satisfaction a person gives up or the regret experienced by not choosing differently
Why do instability and scarcity necessitate choice?
Choices are necessary because they pull a person in opposite directions; both cannot be satisfied.
Explain and give an example of any three of the following: >Good >Service >Free Good >Nuisance Good >Economic Service >Free Service
-Good- physical objects Ex. food items -Service - non tangible good Ex. buses -Free good- physical goods you don't have to pay for Ex. air and water