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16 Cards in this Set
- Front
- Back
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Any resource used in a production process. Resources are grouped into labor, land, capital and entrepreneurship
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Factor of production
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The physical and intellectual effort of people engaged in producing goods and services
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Labor
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Manufactured goods used to make and market other goods and services
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Capital
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The knowledge and skills acquired by labor, principally through education and training
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Human Capital
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A natural-state resource such as real estate, grasses and forests, and metals and minerals
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Land
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A person who alone assumes the risks and uncertainties of a business
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Entrepreneur
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The various combinations of goods that can be produced in an economy when it uses its available resources and technology efficiently
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Production possibilities
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The quantity of other goods that must be given up to obtain a good
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Opportunity cost
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The opportunity cost of producing a good increase as more of the good is produced. The law is based on the fact that not all resources are suited to the production of all goods and that the order of use of a resource in producing a good goes from the most productive resource unit to the least.
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Law of increasing costs
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A country is poor because it does not produce capital goods. It does not produce capital goods because it is poor.
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Vicious circle of poverty
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An idea that eventually takes the form of new, applied technology
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Innovation
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The less than full utilization of a resource's productive capabilities
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Underemployed resources
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The maximum possible production of goods and services generated by the fullest employment of the economy's resources
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Economic efficiency
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The division of labor into specialized activities that allow individuals to be more productive
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Labor specialization
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A country's ability to produce a good using fewer resources than the country it trades with
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Absolute advantage
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A country's ability to produce a good at a lower opportunity cost than the country with which it trades
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Comparative advantage
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