Microeconomics Ch. 1

Front 1

The Economic Problem

Back 1

a 3-part problem consisting of objectives, constraints, and alternatives

Front 2

Objectives

Back 2

the part of the economic problem that refers to the goals that economic agents try to achieve

Front 3

Alternatives

Back 3

the part of the economic problem that refers to the necessity of making choices

Front 4

constraints

Back 4

the part of the economic problem that refers to the limitations that prevent economic agents from achieving their objectives

Front 5

Law of Scarcity

Back 5

the principle that resources are not sufficient to achieve all the objectives, or goals, of an economic problem

Front 6

Consumers

Back 6

economic agents who consumer goods & services & who supply the primary factors of production - labor, capital, and land - to producers

Front 7

Factors of Production

Back 7

the resources or inputs that producers use to produce goods & services, consisting of labor, capital, land, and material inputs

Front 8

Labor

Back 8

a catch-all term referring to all the different kinds of skills and occupations found in the work force; one of the primary factors of production

Front 9

Entrepreneurs

Back 9

imaginative individuals who bring new ideas to the business world & who are willing to take the risks of starting new ventures or businesses

Front 10

Land

Back 10

the property on which business firms build their factories & office buildings; includes the fertile soil & natural resources contained within the land; one of the primary factors of production

Front 11

Capital

Back 11

the plan & equipment required to produce goods & services; one of the primary factors of production

Front 12

Producers

Back 12

economic agents who produce goods & services by receiving factors of production from consumers & other producers

Front 13

Material Inputs

Back 13

semi-finished products purchased by firms & used as a factor of production

Front 14

Utility

Back 14

the value that a consumer derives from the consumption of goods & services

Front 15

Profit

Back 15

the difference between the revenue obtained from selling goods & services & the cost of producing them

Front 16

Interdependence

Back 16

the principles that economic decisions are interrelated such that the consequences of a decision always spread beyond the immediate objectives of the decision

Front 17

Opportunity Cost

Back 17

the economic meaning of cost; the value, in terms of the objectives, of the next best alternative

Front 18

Exchange

Back 18

the trading of goods, services, & factors of production among the key players in the economy

Front 19

Obstruction

Back 19

blockage; condition of being clogged or blocked