Econ-Today 1

Front 1

What, exactly, is economics?

Back 1

Economics is the study of how
individuals, families, businesses, and societies use limited
resources to fulfill their unlimited wants.

Front 2

What is microeconomics?

Back 2

the branch
of economic theory that deals
with behavior and decision
making by small units such as
individuals and firms

Front 3

What is macroeconomics?

Back 3

the
branch of economic theory
dealing with the economy as
a whole and decision making
by large units such as
governments

Front 4

What is meant by Scarcity?

Back 4

Scarcity means that people do not and cannot have enough
income and time to satisfy their every want. What you buy as a
student is limited by the amount of income you have. Even if
everyone in the world were rich, however, scarcity would
continue to exist, because even the richest person in the world
does not have unlimited time.

Front 5

What is the difference between Scarcity and Shortage?

Back 5

Scarcity always exists
because of competing alternative uses for resources, whereas
shortages are temporary. Shortages often occur, for example,
after hurricanes or floods destroy goods and property.

Front 6

what are the factors of production?

Back 6

resources of land, labor,
capital, and entrepreneurship
used to produce goods and
services

Front 7

As an economic term, land refers to

Back 7

natural resources
that exist without human intervention. “Land” includes actual
surface land and water, as well as fish, animals, trees, mineral
deposits, and other “gifts of nature.”

Front 8

The work people do is labor—which is often called a
human resource. Labor includes

Back 8

any work people do to produce
goods and services

Front 9

Goods are

Back 9

tangible items that people can
buy, such as medicine, clothing, or computers.

Front 10

Services are

Back 10

activities done for others for a fee. Doctors, hair stylists, and
Web-page designers all sell their services.

Front 11

Capital are

Back 11

the
manufactured goods used to make other goods and produce
other services. The machines, buildings, and tools used in
making automobiles, for example, are capital goods.

Front 12

The newly
assembled goods are not considered capital unless

Back 12

they, in turn,
produce other goods and services, such as when an automobile
is used as a taxicab.

Front 13

What is productivity?

Back 13

the amount of
output (goods and services)
that results from a given level
of inputs (land, labor, capital,
and entrepreneurship)

Front 14

entrepreneurship refers to

Back 14

the ability of individuals to start
new businesses, introduce new products and processes, and
improve management techniques. Entrepreneurship involves
initiative and willingness to take risks in order to reap profits.

Front 15

Technology includes

Back 15

any use of land,
labor, and capital that produces goods and services more
efficiently

Front 16

trade-off refers to

Back 16

sacrificing one
good or service to purchase
or produce another

Front 17

opportunity cost is

Back 17

the value of the next best alternative that had to be given up to
do the action that was chosen.

Front 18

the production possibilities
curve show

Back 18

the maximum combinations of goods and
services that can be produced from a fixed amount of resources
in a given period of time. This curve can help determine how
much of each item to produce, thus revealing the trade-offs and
opportunity costs involved in each decision.

Front 19

To economists, the word economy

Back 19

means all the
activity in a nation that together affects the production,
distribution, and use of goods and services.

Front 20

economic model is

Back 20

a theory
or simplified representation
that helps explain and predict
economic behavior in the real
world

Front 21

hypothesis refers to

Back 21

an assumption
involving two or more
variables that must be tested
for validity