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31 Cards in this Set
- Front
- Back
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The study of how people seek to satisfy their needs and wants by making choices
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economics
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Resources that are used to make all goods and services
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factors of production
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All natural resources use to produce goods and services
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land
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the effort that a person devotes to a task for which that person is paid for
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labor
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human-made resource that is used to produce other goods and services
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capital
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What are the component of the circular flow?
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households, firm, factor market, product market
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as we shift factors of production from making one good or service to another the cost of producing the second item increases
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Law of increasing costs
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Gain additional benefits
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Marginal benefit
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the cost of producing one more unit of a good
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Marginal Cost
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economic decisions are made by individuals and are based on exchange, or trade
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Market economy
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the central government alone decides how to answer all three economic questions
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centrally planned economy
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market-base economic systems in which government plays a limited role
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mixed economies
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relies on habit, custom, or ritual to decide what to produce, how to produce it, and whom to distribute it
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traditional economy
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the concept that people may decide what and when they want to buy and sell
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voluntary exchange
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the power of consumer to decide what gets produced
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consumer sovereignty
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the doctrine that states that government generally should not intervene in the marketplace
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Laissez faire
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what is a free rider problem?
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Since the public goods are nonexcludable no one will pay for them and soon it will be gone.
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(economic goals) making the most of resources
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economic efficiency
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(economic goals) freedom from government intervention in the production and distribution of goods and services
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economic freedom
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(economic goals) fail distribution of wealth
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economic equity
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(economic goals) innovation leads to economic growth, and economic growth leads to a higher standard of living
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economic growth and innovation
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not enough resources to make all we want
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scarcity
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the study of the behavior and decision making of the entire economies
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macroeconomic
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the study of the economic and descision making of small units such as individuals.
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microeconomics
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what does it mean to say "there is no such thing as a free lunch?"
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Nothing is free because the resources we use is limited.
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The loss of your 2nd alternative decision or the next best thing
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opportunity cost
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How do we use our scarce resources to produce the best thing?
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what to produce
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what resources are needed to produced?
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how to produce
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how does society distribute goods and services?
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for whom to produce
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an economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume.
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externality
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value of output produced
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productivity
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