Unit One Flashcards

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1
Q

Economics

A

Economics is the study of how people satisfy wants with their scarce resources.

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2
Q

Microeconomics

A

The study of the choices made by economics such as households, companies, and individuals.

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3
Q

Macroeconomics

A

Examines the behavior of entire economies.

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4
Q

Goods

A

Physical objects that someone produces: ie. food, clothing, etc.

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5
Q

Services

A

Are actions or activities that one person performs for another: ie. medical care, plumber, etc.

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6
Q

Scarcity

A

The condition where unlimited human wants face limited resources.

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7
Q

Shortage

A

Occurs when consumers want more of a good or service that producers can or are willing to make available at a particular price.

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8
Q

Entrepreneurs

A

Are the people who decide how to combine resources to create new goods and services. (Starting a business small or big)

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9
Q

Factors of Production

A

Resources necessary to produce what people want or need.

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10
Q

Physical Capital

A

Human made objects used to create other goods and services

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11
Q

Human Capital

A

The knowledge and skills a worker gains through education and experience

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12
Q

Analysis

A

Looks at the “why” and “how” of economic activity–why prices go up or down, for example, or how taxes affect savings.

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13
Q

Explanation

A

Refers to how economists communicate knowledge of the economy and its activities to the society’s population.

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14
Q

Prediction

A

Refers to how yesterday’s and today’s economic activities advise us of potential future activity.

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15
Q

Durable Goods

A

Goods that last for at least 3 years when used regularly.

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16
Q

Non-Durable Goods

A

Item that lasts for fewer than 3 years when used regularly.

17
Q

Capital Goods

A

A tool or good such as machinery or equipment that is used by businesses to produce other products.

18
Q

Consumer Goods

A

A good intendent for fine use.

19
Q

Consumers

A

The people who purchase things; they use goods and services to satisfy wants and needs.

20
Q

Producers

A

The people (businesses) who make things that satisfy consumers’ needs and wants.

21
Q

Value

A

Worth expressed in dollars and cents. Scarcity by itself is not enough to create value. For something to have value, it must also have utility.

22
Q

Utility

A

A good’s or service’s capacity to provide satisfaction, which varies with the needs and wants of each person.

23
Q

Wealth

A

The accumulation of goods that are tangible, scarce, useful, and transferable to another person.

24
Q

Trade-Offs

A

The alternative choices people face in making an economic decision. A decision-making grid lists the advantages and disadvantages of each choice.

25
Q

Opportunity Cost

A

The cost of the next best alternative among a person’s choices. The opportunity cost is the money, lime, or resources a person gives up, or sacrifices, to make his final choice.

26
Q

Guns or Butter

A

A common phrase to describe the choices facing governments: the choice between spending money on military or domestic needs.

27
Q

Thinking at the Margin

A

Adding or subtracting one unit, such as one hour or one dollar, deciding how much more or less to do.

28
Q

Cost-Benefit Analysis

A

Comparing the opportunity cost and the benefits or what you will sacrifice and what you will gain.

29
Q

Marginal Cost

A

The extra cost of adding one unit, ie. sleeping one extra hour or building one extra house.

30
Q

Marginal Benefit

A

The extra benefit of adding the same unit as long as the marginal benefits exceed the marginal costs, or it pays to have one more unit.

31
Q

Production Possibilities Curve

A

A graph that shows alternative ways to use an economy’s productive resources.
The production possibilities frontier diagram illustrates the concept of opportunity cost.

32
Q

Absolute Advantage

A

When a person or nation can produce more of a given product than another person or nation using a given amount of resources.

33
Q

Law of Comparative Advantage (LOCA)

A

A nation is better off when it produces goods and services for which it had a comparative advantage, each nation can then use the money it earns selling goods and services it makes efficiently and buy goods and services it doesn’t.