Terminology 1 Flashcards
Factors of production
Resources used to produce goods & services - land, labour, capital
Goods
Tangible products such as cars or shoes
Services
Intangible products, such as legal services and education
Production
The act of making goods & services
Consumption
The act of using goods or services to satisfy wants
Opportunity cost
The value of the next best alternative that is forgone when one alternative is chosen
Production possibilities boundary
A curve showing which alternative combinations of output can be attained if all available resources are used efficiently; it is the boundary between attainable and unattainable output combinations
Resource allocation
The allocation of an economy’s scarce resources among alternative uses
Microeconomics
The study of the determination of the prices and quantities of specific products and factors of production
Macroeconomics
The study of the determination of economic aggregates such as total output, employment and growth
Specialization of labour
The specialization of individual workers in the production of particular goods or services
Division of labour
The breaking up of a production process into a series of specialized tasks each done by a different worker
Barter
An economic system in which goods and services are traded directly for other goods and services
Traditional economy
An economy in which behaviour is based mostly on tradition
Command economy
An economy in which most economic decisions are made by a central planning authority
