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25 Cards in this Set

  • Front
  • Back
Good
anything from which individuals receive utility or satisfaction.
Utility
the satisfaction one receives from a good.
Bad
anything from individuals receive disutility or dissatisfaction.
Disutility
the dissatisfaction one receives from a bad.
Resources
1. Land

2. Labor

3. Capital

4. Entrepreneurship
Resources:

1. Land
all natural resources, such as minerals, forests, water and unimproved land.
Resources:

2. Labor
the physical and mental talents people contribute to the production process.
Resources:

3. Capital
Produced goods that can be used for further production such as factories machinery, tools, computers and buildings.

Money is not capital!
Resources:

4. Entrepreneurship
the particular talent some people have for organizing the resources of land, labor and capital to produce goods, seek new business opportunities and develop new ways of doing things.
Scarcity
the condition in which our wants are greater than the limited resources available to satisfy those wants.
Economics
the science of scarcity; the science of how individuals and societies deal with the fact that wants are greater than the limited resources available to satisfy those wants.
Scarcity's Effects
1. the need to make choices

2. the need for a rationing device

3. competition
Scarcity's Effects

1. the need to make choices
in a world of limited resources, we must choose which wants will be satisfied and which will go unsatisfied.
Scarcity's Effects

2. the need for a rationing device
a rationing device is a means of deciding who gets that quantities of the available resources and goods.
Scarcity's Effects

3. competition
because there are unlimited wants, there is competition for the limited resources.
Opportunity Cost
the most highly valued opportunity of alternative forfeited when a choice is made.
Marginal Benefits
additional benefits; the benefits connected to consuming an additional unit of a good or undertaking one more unit of an activity.

Graph: MB goes down as time goes on.
Marginal Costs
additional costs; the costs connected to consuming an additional unit of a good or undertaking one more unit of an activity.

Graph: MC goes up as time goes on.
Decisions at the Margin
decision making characterized by weighing the additional benefits of a change against the additional cost of a change with respect to current conditions.
Efficiency
exists when marginal benefits equal marginal costs.

Graph: MB = MC; where MB and MC intersect.
Exchange (Trade)
the process of giving up one thing for another.
Positive Economics
the study of "what is" in economic matters.
Normative Economics
the study of "what should be" in economic matters.
Microeconomics
the branch of economics that deals with human behavior and choices as they relate to relatively small units, such as an individual, a firm, an industry, a single market.
Macroeconomics
the branch of economics that deals with human behavior and choices as they relate to highly aggregate markets (ex. the good and services market) or the entire economy.