Unit 1 Flashcards
Why are scarcity and choice the basic to the study of economics?
There is not an endless supply of resources
What does the acronym TINSTAAFL mean?
Every economic decision has a cost, nothing is free
Something such as air, food, or shelter that is necessary for survival is best described as?
Needs
In Economic terms, what do we call physical objects such as clothes, bicycles, houses, cars, toilet paper or shoes?
Goods
In microeconomic terms, what do we call natural resources that are used to make goods and/or services?
Land
Which term is used to describe human-made resource that are used to create other goods and/or services?
Capital
The Opportunity cost of an economic decision is
the next best opportunity that you give up when one choice is made over another.
Definition of ECONOMICS?
The science of decision-making
Entrepreneurs are people that
Pull together a capital to make a business
The purpose of the production possibilities curve shows
an alternate way of being fully eff using all available resources.
The resources used to make goods and services are called
Factors of production.
Economic models are used for what main purpose?
To explain, simplify, or make predictions about economic outcomes.
Labor, in economic terms, tell me the 3 things that go into the workers Labor
Efforts, ability, and skill
List the 4 factors of production and give examples of each
Land - farmland & minerals, Labor - Employees & Engineers, Capital - money & machinery, and Entrepreneurship - risk taker
All points represented on the curve of the production possibilities frontier represent:
Maximum Output
Increased productivity causes the production possibilities frontier to
Shift right
The money we spend on a good or service is only part of the actual cost; what do we call the overall cost of an economic decision?
Opportunity cost
One example of an economic model that graphically represents the concept of opportunity cost is:
Production possibilities curve
J M Keynes wrote an important book about the government’s place in the economic world. When was the book published? year and event
“The General Theory of Employment, Interest, and Money.” Published in 1936 during the great depression.
Definition of an “entrepreneur?”
A person willing to take risk and not scared of failing.
The four factors of production are used to help us understand economic activity. What is another word that economists use to describe the 4 factors of production?
Input
In Economic terms, define and give 2 examples of specialization?
When a person, business, or geographic region can perform a task better than others. Ecuador specializes in growing bananas. A server in a restaurant.
Cost benefit analysis is the practice of
comparing the cost of an action to the possible benefits of the decision.
What are the three ideas of Thinking like an economist involves
Cost benefit analysis, building simple models, and making decisions in small steps.
What are the three basic questions of economics that each individual, business and society must answer to be successful in an economic world? Explain each
A) What to Produce? Each person, business, and society must decide.
B) How to produce it? What combination of technology and human resources.
C) For whom should it be produced? Society must decide
Adam Smith wrote a famous book about economics. See if you can remember some important facts about the book and its subject matter:
What was the name of the book? what year was it published?
What are TWO of the key ideas Smith included in his famous publication?
The Wealth of Nations, 1776
A) Division of Labor
B) Specialization
Which of the Four Factors of Production is “different” from the others and WHY?
Entrepreneurship- because the quantities are not varied to affect manufacturing
Give 5 Examples of an opportunity cost
We didn’t go to the beach this summer, instead we saved money to buy a computer for college. We didn’t go to the cheesecake factory, instead we got fast food to save money. We didn’t go to ulta, instead we bought makeup from tj max for a cheaper price.
