Topic 1 ~ Fundamentals of Econ Flashcards
shortage
When producers will NOT or canNOT offer goods/services at CURRENT prices
Leads to surPLUS ($ goes UP)
opportunity cost
Most DESIRABLE alternative is given up (“taken out”)
Results from making a decision
More often than not “second choice is the best choice”
Ex. “I can’t have A so I’ll take C”
Different for everyone
efficiency
Using resources in certain ways to MAXimize production
3 Basic Economic questions
WHAT will be produced?
HOW will it be produced?
HOW will the output society produces be distributed?
(“HOW will society react to said products?”)
underutilization
UNDER performing goods/services are produced LESS
In other words “goods/services that are NOT bought/used = LESS production”
goods
Physical objects that can satisfy public wants
need vs. want
Unfulfilled desires that motivate certain behaviors and (possibly) improve overall well-being
Includes physiological and biological requirements for “maintaining life”
Maintaining life = NEEDS ; Psychological desires = WANTS… Ex. NEED water vs WANT Gucci purse
Markets care very little about needs & wants
services
Some type of “act” or job a consumer is willing to pay for
Doctors, restaurants, car wash, etc
scarcity
Most BASIC economic problem “facing society”
Occurs when LIMITED QUANtities of RESOURCES are needed to meet UNlimited needs/desires
Needs/desires ALWAYS exist
factors of production
LAND - all NATURAL resources that are used to produce goods & services
LABOR - any HUMAN EFFORT devoted to tasks; “which said people get paid” (a job)
CAPITAL - any HUMAN MADE RESOURCE used to create other goods & services; 2 Types Human & Physical
physical capital
TOOLS/machinery; something people had to BUILD or engineer
Forklift, hammer, etc
human capital
HIRED help; employees
trade-off
“Cost” or what someone LOST during their decision
The choice you did NOT pick
“guns or butter” concept
Main Question: How much $ should a country spend on military [guns] & domestic [butter] needs?
Military Needs
Weapons, trained professionals, tech
Domestic Needs
Healthcare, education, food supply
BOTH ARE EQUALLY IMPORTANT
Limited amount of $$ 👉 gov. officials must pick 1 or 2
production possibilities curve
Graphs used to show alternate ways of utilizing resources
“The Line” / Frontier
Displays MAXimum possible OUTput for specific economies
Can NOT go ABOVE the Line
The Line ITSELF can move UP but NOT the DATA
“On the Line” = efficient/working economy
