vocab unit 1 Flashcards
The study of choices and of the incentives behind those choices
economics
A good or service that is necessary for survival
need
A good or service that is desirable but is not necessary for survival
want
A good sold to consumers that is expected to last for at least three years
durable good
A good that is sold with the expectation that it will be consumed within three years
nondurable good
A final good that is sold to the end user for their consumption
consumer good
The physical objects used in the production or sale of a good or service.
capital good/physical capital
The concept that desirable things have a limit to their quantity so we must make choices.
scarcity
The resources that can be combined to create a business. Also called Productive Resources.
factors of production
A graph that shows the different amounts of two goods or services that can be created at a given point in time.
production possibilities curve
The idea that by choosing to use any resource in a given way, you have paid a cost equal to the next best alternative.
opportunity cost
The idea that by choosing to use any resource in a given way, you give up the ability to use that resource for all of its other possible uses.
trade-off
The knowledge, skills, and abilities that a person puts into the production or sale of a good or service.
human capital
Choosing to focus on a limited number of tasks instead of trying to do everything.
specialization
The quality of life experienced by the average person in any given area.
standard of living
The idea that the marginal cost needed to continue gaining the same marginal benefit will eventually start to increase.
law of increasing cost
An economic system that has its primary focus on maintaining current customs, methods and beliefs.
traditional economy
An economic system that has its primary focus on maximizing individual choice and minimizing outside control.
market economy
An economic system that has its primary focus on maximizing control and minimizing individual choice.
command economy
An economic system that is a blending of the features from all other types of economic systems.
mixed economy
The act of reducing or eliminating government control while moving towards greater private control of a business or industry.
privatization
An economic system that has its primary focus on maximizing individual choice and minimizing outside control.
free enterprise
Anything that influences people to either act or not act in a given way.
incentive
The desire for financial gain that acts as an incentive to participate in any economy.
profit motive
The idea that the customers are the ultimate decision makers who control an economy.
consumer sovereignty
The additional amount produced after taking a given action.
marginal product
The additional benefit gained from taking a given action, usually expressed in monetary terms.
marginal revenue
The additional cost incurred from taking a given action.
marginal cost
Any time in which a market fails to result in an efficient outcome.
market failure
A good produced by the government for public consumption.
public good
An unintended side effect that occurs with the use of any good or service.
externality
The minimum amount of money needed to survive. Also called the Poverty Line.
poverty threshold
