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19 Cards in this Set
- Front
- Back
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Opportunity cost
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The best alternative sacrificed for a chosen alternative
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Marginal analysis
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An examination of the effects of additions to or subtractions from a current situation
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Production possiblities curve
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a curve that shows the maximum combination of two outputs an economy can produce in a given perion of time with its available resources and technology
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Technology
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The body of knowledge applied to how goods are produced
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Law of increasing opportunity costs
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The principle that the opportunity cost increases as the production of one output expands
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Economic growth
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The ability of an economy to produce greater levels of output, represted by an outward shift of its production possiblitities curve
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Investment
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The Accumulation of capital, such as factories, machines and inventories, that is used to produce goods and services
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Economic system
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The organizations and methods used to determine what goods and services are produced, how they are produced, and for whom they are produced
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Traditional economy
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A system that answers the What, How, and for whom questions the way they have always been answered
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Command Economy
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A system that answers the What, How, and for Whom questions by central authority
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Market Economy
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An economic system that answers the What, How , and for Whom Questions using prices determined by the interactoin of forces of supply and demand
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Adam Smith
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(1723-1790) the father of modern economics who wrote "the wealth of nations" published in 1776
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Invisible hand
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a phrase that expresses the belief that the best interests of a society are served when individual consumers and producers compete to achieve their own private interests.
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Mixed economy
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an economic system that answers the What, How, and for Whom questions through a mixture of traditional, command, and market systems
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Capitalism
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an economic system characterized by private ownership of resources and markets
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Consumer Sovereignty
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The freedom of consumers to cast their dollar votes to buy, at prices determinded in competitive markets
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Socialism
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An economic system characterized by goverment ownership of resources and centralized decision making
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Communism
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A stateless, classless economic system in which all the factors of production are owned by the workers and people share in production according to their needs. In Marx's view, this is the highest form of socialism toward which the revolution should strive
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Karl Marx
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(1818-1883) His criticim of capitalism advanced communism
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