UNIT 1 Flashcards
Scarcity
Unlimited wants but limited resources
Opportunity Cost
The cost of the next best alternative use of money, time, or resources when you give up something you want in terms of other goods/services
Cost Benefit Analysis
Compares a cost of an action to the benefits received
Trade Off
Alternative choices to make an economic decision
Factors of Production
Land, Capital, Labor, and Entrepreneurs
Land
Gifts of nature and Natural resources
Labor
People with efforts and abilities
Capital
Tools, Equipment, and Factories
Entrepreneurship
Individuals who start new businesses
Human Capital
The sum of skills, abilities, health, and motivation of people
Production possibilities frontier (curve)
A diagram representing various combinations of all goods and/or services and economy can produce when all productive resources are fully employed
Consumer Goods
A good intended for final use by individuals (Clothing, Vehicles, Appliances)
Capital Goods
A manufactured good that is used towards other goods and services (Coffee Machines, Delivery Cars, Science Equipment)
Value
A worth that can be expressed in dollars or cents
Utility
The capacity to be useful and provide satisfaction
Factor Market
Market where productive resources are bought and sold
Product Market
Market where producers sell their goods and services to consumers
Standard of Living
The quality of life based on the possession of necessities and luxuries that make life easier
Market Economy
Independent interests and people’s decisions act as votes
Command Economy
Central authority by government, little influence by the people
Traditional Economy
Ritual, habit, or customs. Specific roles
Economic Efficiency
Resources are scarce, production must be used wisely. Must be efficient so benefits are greater than cost
Economic Growth
Growth is needed to provide more goods and services, required to meet more needs
Economic equity
Illegal to discriminate in employment, no false product claims
Full Employment
Provision for an many jobs as possible
Price Stability
Stable prices and pay combat against inflation. Fixed income is harder to live on. Price stability helps budgeting and certainties for the future
Economic Security
State funds for people without jobs, and insurance plans, social security, and Medicare for workers
Economic Freedom
Individual choice of occupations, money usage, and employers, business can choose where and how to produce
Comparative Advantage
The ability of an economy to produce a good/service more efficiently and economically competitive than others at a lower opportunity cost
Absolute Advantage
The ability to produce a service/good at a greater quantity with the same quantity of inputs per unit of time than its competitors
Terms of Trade
The ratio between a county’s export prices and import prices
Economic Interdependence
Mutual dependence of participants in an economic system who trade to obtain products they can’t produce
Globalization
The flow and spread of financial products, goods, technology, information, and jobs between other countries
Lemon laws
Provide a solution/protection for purchasers of cars and other goods
