The Economic Way of Thinking : 1/8/16 Flashcards
Consumers have two basic desires. : 1. _____. 2. _____.
Wants, needs
_____ are desires that can be satisfied by consuming a good or service.
Wants
______ are things such as food, clothing, and shelter, that are necessary for survival.
Needs
_________ is the situation that exists when there are not enough resources to meet human wants.
Scarcity
___________ is the study of how people choose to use scarce resources to satisfy their wants. It involves : 1. Examining how individuals, business, governments, and societies chose to use s______ r_________ to satisfy their wants. 2. Organizing, analyzing, and interpreting d___ about those economic behaviors. 3. Developing t_______ and economic l____ that explain how the economy works and to predict what might happen in the future.
Economics, scarce resources, data, theories, laws
C_____ is central to the use of s______ r_________.
Choice, scarce resources
________, then, affects which goods are made and which services are provided.
Scarcity
______ are physical objects that can be purchased, such as food, clothing, and furniture.
Goods
_________ are work that one person performs for another for payment.
Services
________ is a person who buys goods or services for personal use.
Consumer
________ is a person who makes goods or produces services.
Producer
S______ requires every society to address three basic economic questions. : 1. W____ w___ b_ p_______? 2. H___ w___ i_ b_ p________? 3. F__ w____ w___ i_ b_ p________?
Scarcity, What will be produced?, How will it be produced?, For whom will it be produced?
This f____ f______________ e______ q______ involves not only ____ to produce but also ____ _____ to produce.
First fundamental economic questions, what, how much
Once decided, s_______ must then decide exactly how they are going to get these goods and services to people.
Societies
F_______ of p_________ are the resources needed to produce goods and services.
Factors of production
They divide the factors of production into four broad categories. : 1. L____. 2. L_____. 3. C______. 4. E_________________.
Land, labor, capital, entrepreneurship
All of these factors have one thing in common– their supply is _______.
Limited
L___ includes all the natural resources found on or under the ground that are used to produce goods and services.
Land
L_____ is all the human time, effort, and talent that go into the making of products.
Labor
C_______ is all the resources made and used by people to produce and distribute goods and services.
Capital
C_____ is all of the producer’s physical resources.
Capital
For this reason capital is sometimes called p______ c_____, or r___ c_____.
Physical capital, real capital
While businesses invest in r___ c______, workers in invest in h_____ c_____.
Real capital, human capital
H______ c_______ is the knowledge and skills gained through experience.
Human capital
E______________, brings the other three factors together.
Entrepreneurship
E______________ is the combination of vision, skill, ingenuity, and willingness to take risks that is needed to create and run new businesses.
Entrepreneurship
E___________ are also risk takers. They risk their time, energy, creativity, and money in the hope of making a profit.
Entrepreneurs
Factors that shape economic choice. : 1. I_______. 2. U____.
Incentives, utility
I________ are methods used to encourage people to take certain actions.
Incentives
U_____ is the benefit or satisfaction received from using a good or service.
Utility
When people e_________, they consider both incentives and utility.
Economize
To e_________ means to make decisions according to the beat combination of costs and benefits.
Economize
Every choice involves _____.
Costs
_____ can take the form of money, time, or something you value.
Costs
T_____-___ do not require all or nothing choices, rather they involve giving up some of one thing to gain more of another.
Trade- offs
O__________ c_____ of a decision is the value of the next best alternative, or what you give up by choosing one alternative over another.
Opportunity costs
The practice of examining the costs and the expected benefits of a choice as an aid to decision making is called c___-______ _______.
Cost- benefit analysis
C____- ______ _______ is one of the most useful tools for individuals when they need to evaluate the relative worth of economic choices.
Cost- benefit analysis
The simplest application of cost- benefit analysis is the d________-________ ____.
Decision-making grid
The d_________-_______ ___ shows what you get and what you give up when you make choices.
Decision-making grid
C____ and b_______ change over time as do g____ and c_____________.
Costs, benefits, goals, circumstances
The analysis of m________ c_____ and m_______ b_______ is central to the study of economics.
Marginal costs, marginal benefits
M_______ _____ is the additional cost of using one more unit of product.
Marginal cost
M_______ _______ is the additional satisfaction from using one more unit of a product.
Marginal benefit
The P_________ P_________ F_______ (?) is a graph used by economists to show the impact of scarcity on an economy.
Production Possibilities Frontier (PPF)
The PPF is based on assumptions that simplify economic interactions. : 1. Resources are f____. 2. All resources are f_____ e______. 3. Only ___ things can be produced. 4. T__________ is f_____.
Fixed, fully employed, two, technology, fixed
C______ p______ is a Latin phrase used in economics to meaning all other things being held equal or constant.
Ceteris paribus
The ___ represents the b_____– or f_____– between what it is possible to produce and what is not possible to produce.
PPF, border, frontier
The ___ shows the opportunity costs of each choice in a v_____ way.
PPF, visual
Anything ______ the curve is an _________ use of resources. A point __ the curve is an ______ use of resources. Anything ______ the curve is ___________.
Inside, inefficient, on, efficient, outside, impossible
E_________ is the condition in which economic resources are being used to produce the maximum amount of goods and services.
Efficiency
U______________ is the condition in which economic resources are not being used to their full potential.
Underutilization
The _____ of the ____ shows a third important economic concept.
Shape, PPF
The l___ of i_________ o__________ c____ states that as production switches from one product to another, increasing amounts of resources are needed to increase the production of the second product.
Law of increasing opportunity costs
The ___ illustrates a country’s p______ p_______ p__________ as if all resources were f____.
PPF, present production possibilities, fixed
Anything that causes economic output to increase or decrease will _____ the curve.
Shift
Things that would make the PPF shift ______. : 1. E________ g_____. 2. T_________.
Outward, economic growth, technology
Things that would make the PPF shift ______. : 1. N______ d______. 2. W__/ p_____.
Inward, natural disaster, war, plague
