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25 Cards in this Set
- Front
- Back
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production possibilities model
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shows goods/services that an economy is capable of producing given the factor of production and technology available
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economic system
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set of rules that states how an economy's resources are to be owned and how decisions of their use are to be made.
ie- government control, market economy |
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factors of production
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resources available to an economy for the production of goods and services
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utility
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value or satisfaction that people derive from the goods or services they consume and the activities they pursue
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labor
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human effort that can be applied in the production of goods and services
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capital
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factor of production that has been produced for the use in the production of other goods and services.
It can be physical goods or intellectual discoveries ie-offices, machinery, softwares |
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natural resources
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resources of nature that can be used in the production of goods and services. no human effort has been made to alter them.
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unemployed people are still part of the ____________
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labor that is available to the economy
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human capital
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the skills a worker has as a result of education, training, or experience that can be used in production
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the amount of labor available to the economy can be increased in two ways:
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1. increase total quantity of labor by either increasing the number of people available to work or by increasing average number of hours of work per time period
2. increase the amount of human capital possessed by workers |
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Is money a capital?
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No, but it can be used to acquire capital. It is financial capital.
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Financial capital
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money and other assets that represents claims on your future payments. Can be used to to purchase capital.
ie-cash, bonds, stocks |
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If people acquire utility from viewing the wilderness, it is considered a _____
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natural resource. it provides a service to its consumers
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Natural resources available to use can be expanded in three ways:
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1. discovery of new natural resources
2. discovery of new uses for the natural resource 3. discovery of new ways of extracting the natural resources in order to use them |
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technology
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knowledge that can be applied to the production of goods and services
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entrepreneur
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person who, in a market economy, seeks to earn profits by finding new ways to organize factors of production
*in non-market economies, the role of entrepreneurs are played by bureaucrats and other decision-makers who responds to incentives rather than profits in their choices about resource allocation. |
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Is a mineral that is extracted and stored in a tank a natural resource anymore?
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no
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What increases economic growth?
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1. An increase in the quantity of factors of production
2. An increase in the quality of factors of production They shift economy's production possibilities curve outwards |
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economic growth
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process through which an economy achieves an outward shift in its production possibilities curve
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By using resources to create capital, consumption is ____ for a higher standard of living in the ______
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-sacrificed
-long-run |
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market capitalist economy
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resources are generally owned by private individuals who make decisions on their use
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command socialist economy
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government is primary owner of capital and natural resources and has broad power to allocate the use of factors of production
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mixed economy
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economy that combines elements of market capitalist economy and command socialist economy
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___ economies represent a pure case of market capilist and command socialist economy
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no
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market economies are more likely to allocate resources more efficiently than other economies due to __________, therefore they generate more income.
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comparative advantage
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