Scarcity and Opportunity Cost Flashcards
Microeconomics
focuses on individual decision-making units and how they interact
Macroeconomics
explores the economy as a whole
Scarcity
the fixed amount of goods or services available
Traditional economy
an economic system in which traditions, customs, and beliefs help shape the goods and services the economy produces, as well as the rule and manner of their distribution also referred to as a subsistence economy, a traditional economy is defined by bartering and trading
command economy
an economic system in which the means of production are publicly owned and economic activity is directed by a central government or portion of the government
market economy
an economic system in which the forces of supply and demand determine what goods and services are produced
mixed economy
an economy which practiced characteristics of both command and market economies; supply and demand largely influence the economy, but there is government intervention to meet certain economic goals
opportunity cost
the cost of choosing; what you give up by choosing one option
goods
objects that can fulfill human wants/needs, provide utility
services
economic activity that is intangible; provides utility, but cannot be stored
endowment
natural and human resources from which all goods and services must be produced
utility
satisfaction; economists assume maximizing this drives individual choice; measured in utils
profit motive
the tendency of people to engage in activities that will lead to monetary gain
consumer sovereignty
the economic power of the individual in a free market
government regulation
requirements the government places on private firms and individuals to achieve the government’s goals
