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23 Cards in this Set
- Front
- Back
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Scarcity
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scarcity–how well we satisfy our unlimited wants in a world of limited resources.
wants exceed resources. |
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Scarce Resources in production of goods
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labor
land capital entrepreneurship |
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Labor
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is the total of both physical and mental effort expended by people in the production of goods and services.
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Land
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is the natural resources used in the production of goods and services.
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Capital
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is the equipment and structures used to produce goods and services. Office buildings, tools, machines and factories are all considered capital goods.
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Human Capital
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the productive knowledge and skill people receive from education and on-the-job training.
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Entrepeneurship
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is the process of combining the labor, land and capital together to produce goods and services.
The entrepreneur is the one who makes the tough and risky decisions about what to produce and how to produce. |
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Tangible Goods
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goods that can be heard smelled or tasted
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Intangible Goods
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fairness for all, friendship, knowledge
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service
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intangible goods people are willing to pay for
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Economic Goods
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Scarce goods: that need to be competed for
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Opportunity Cost
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The cost of making one choice over the other
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Marginal Thinking
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Thinking of how much of something to do rather than whether or not to do something.
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Marginal Choices
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The effects of adding or subtracting something
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Rule of Rational choice
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Only make a choice if Marginal Benifits are greater than marginal costs
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Net Benifits
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The difference between expected marginal benifits and expected marginal costs
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Positive Incentives
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are those that either increase benefits or reduce costs and thus result in an increased level of the related activity or behavior.
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Negative Incentives
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on the other hand, either reduce benefits or increase costs, resulting in a decreased level of the related activity or behavior.
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Comparative Advantage
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If a place region or country can produce a good with lower opportunity costs than another than they should specialize in that production
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Property Rights
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give owners incentive to increase the efficiency of their firm
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Well Defined property rights
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encourage investment, innovation, exchange, conservation, and economic growth
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Market Economy
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is voluntary exchange and the price system that guides people's choices and produces solutions to the questions of what goods to produce and how to produce those goods and distribute them.
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Price controls
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sometimes force prices above or below what they would be in a market economy
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