Scarcity and the factors of production Flashcards
the study of choice. how we choose to use limited resources to satisfy our unlimited wants
economics
saves time and money
capital
not necessary to survival
want
the study of how people seek to meet their needs and wants by making choices
economics
persons who perform such actions as cutting hair or teaching school
services
when producers will not or cannot offer goods and services at current prices
shortage
land
labor
capital
entrepreneur
factors of production
when people make resources for producing other goods and services
capital
water, forests, and all other natural resources used to produce goods and services
land
physical
human
capital
factories, machinery, and pencils
physical capital
leaders who take risks to develop original ideas to start new industries
entrepreneurs
what can be overcome
shortage
what lasts forever
scarcity
alternatives that people give up when they choose one course of action each question
trade offs
who makes trade offs
individuals
businesses
large groups
government
the most desirable alternative given up as the result of a decision
opportunity cost
deciding whether to do or use one more or one less unit of some resource
thinking at the margin
what does thinking at the margin help with
making decisions
what does thinking at the margin help compare
options along with their benefits and costs
in what was are trade offs and opportunity cost alike
people eventually make a decision that is best for them or others
trading for something better
trade off
you may have to give up an option that was also good
opportunity cost
the nation has to choose between 2 options when spending
people or war
guns or butter
displays the benefits of each option along with the negatives that come along with making a decision
thinking at the margin
categories or specific goods or services to be compared
farm goods, capital goods, consumer goods
range of choices in the combination of goods or services produced
plotted points
shows combinations of the production of items
production possibilities frontier
an economy working at its most efficient production levels
efficiency
an economy working below its most efficient production levels
underutilization
future production possibilities frontier if more land, labor, or capital resources become available
growth
alternative ways to use an economy’s resources
production possibilities graph
alternative we give up when choosing an option over another
cost
as production switched from one item to another, more resources are needed for the second item
law of increasing costs
economic concept necessitating choices and priorities in any society
scarcity
economic question answered by basic social values and goals
standard of living
5 economic goals
economic... efficiency freedom security and predictably growth and innovation equity
four main kinds of economies
traditional
market
centrally planned/ command
mixed
an economic system that relies on habit, custom, or ritual to decide questions of production and consumption of goods and services
traditional
an encyclopedia entry illustrating how a hunter- gatherer group collects and shares food resources
economic system
when voluntary exchanges in the markets determine decisions on production and consumption
market
when people earn income for supplying land, labor, capital, or entrepreneurship
factor payment
people who receive disaster relief from the government after a flood are benefitting from an economic system
safety net
purchase
consume
in charge
individuals and businesses
consume goods and services
households
produce
firms
quality is high
prices are lower
competition
motivates producer to make something
self interest
founder of capitalism
followed lassiez faire
wrote wealth of nations
invisible hand theory
adam smith
in a society someone will see a need and be pulled by a product
invisible hand theory
market in which households purchase the goods and services that firms produce
product market
an expectation that encourages people to behave in a certain way
incentive
power of consumers to decide what gets produced
consumer sovereignty
market in which firms purchase the factors of production from households
factor market
financial gain made in a transaction
profit
concentration of productive efforts of individuals and firms on a limited number of activities
specialization
an arrangement that allows for exchange among buyers and sellers
market
what did they lack
incentive
innovation
gov controls FOP
what how whom we need things for
central government
jobs were guaranteed
lack of incentives and innovation
effects on agriculture and industry
luxuries made affordable
goods were scarce and poor quality
effects on consumers
democratic means should be used to distribute wealth evenly through a society
socialism
centrally planned economy with all economic and political power in hands of gov
communism
do not allow individuals freedom of judgement and action
authoritarian
large farms leased from the state to groups of peasant farmers
collective
requires a large capital investment to produce items used in other industries
heavy industry
how does gov intervene in north korea’s economy
gov owns all property and economies output
FOP
how is gov intervention less extreme in china’s economy
1/4 of all enterprise are atleast partly owned by individuals
what country is one of the worlds freest markets
gov protects private property
hong kong
determined in a free market by private decision
free enterprise
why is china said to have a transition economy
moving from centrally planned market
sold to an individual
privatize
one end is centrally planned the other is free
continuum
