Topic 1 - What is economics? Flashcards
Enterprise (Entrepreneurship)
The risk taker who combines the factors of production to create goods and services.
(The backbone of the economy. Ideas. CREATES BUSINESSES)
Human Capital
The expertise experience, skill, education and knowledge of labour.
Capital Goods (Physical Capital)
Physical, man made tools, machines and resources involved in production process. (Machines, sewing, factories…)
Labour
The effort and time put into production for which someone is paid.
(Plumber, lawyers…)
Land
ALL natural resources.
(Soil, air wood, animals, plants)
Sunk Cost
Once a cost has been incurred (acted upon), it cannot be recovered.
Cost
What you SPEND when you make a choice. (Think time, money and resources)
Trade
A voluntary exchange of goods.
($0.50 for a pencil. We trade because it is inefficient to make everything we need. This allows certain people or countries to specialize in something, then trade for what they want/need.)
Future Consequences
When we make decisions, the effects or consequences are far reaching. A choice we make today may impact us or other people in the long run.
Incentive
Something that motivates a person to act in a certain way.
(Incentives motivate our behavior whether we realize it or not).
Market
A space where buyers and sellers trade, or do business.
(In a market place with limited government intervention, buyers and sellers are free to conduct trade. This makes buying/selling NATURALLY EFFICIENT).
Benefits
What you GAIN when you make a choice.
(Think time, money and resources).
Tradeoffs
What you give off every time you make a choice.
(Usually a list of options you gave up. The highest value of tradeoffs is your opportunity cost).
Opportunity cost
What you have to give up to buy what you want (in terms of other goods or services).
Scarcity
There is a limited amount of resources to meet unlimited wants.
