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19 Cards in this Set
- Front
- Back
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scarcity
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the condition that occurs because people's wants and needs are unlimited, and the resources needed to produce goods and services to meet these wants and needs are limited
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unlimited wants and needs
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the human characteristic of never feeling that all wants and needs have been satisfied
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limited resources
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there are never enough resources to fulfill all wants and needs
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allocation
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the process of choosing which needs will be satisfied and how much of our resources we will use to satisfy them
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economics
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the social science that deals with how society allocates its scarce resources among its unlimited wants and needs
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opportunity cost
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the value of any alternative that you must give up when you make a choice
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opportunity benefit
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what is gained by making a particular choice
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microeconomics
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the branch of economics that examines the choices and interactions of individuals concerning one produce, one firm, or one industry
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macroeconomics
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the branch of economics that examines the behavior of the whole economy at once
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theory
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a simplified description of reality
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budget constraint
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the mix of goods that can be purchased, given a limited amount of income
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what is the basic economic problem
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scarcity
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why does this problem happen
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people's wants and needs are unlimited; resources are limited
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what's the solution to the basic economic problem
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allocation
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two types of decisions
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individual; social
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examples of micro
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farmer determines how much product to produce based on market price; consumer decides what and how much to purchase based on retail price
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ex of macro
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government decides how to control inflation: cut back on spending, make credit difficult for consumers to get, raise taxes to cut consumer spending
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3 questions
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1. what will be produced with the limited resources?
2. how will the goods and services be produced? 3. for whom will the goods and services be produced? |
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why capital to make coal?
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the opportunity cost of labor relative to capital went up
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