Studied by 8 people
Scarcity
unlimited wants but limited resources
microeconomics
the study of small economic units (individuals and firms)
macroeconomics
the study of the larger economy (inflation, international trade)
land, labor, capital, entrepenurship
four factors of production
trade-offs
every choice has a cost and that cost is a
opportunity cost
the second best option, what you give up to gain something else
utility
satisfaction
marginal
additionalal
locate
distribute
price
what buyer pays
cost
what seller pays
profit
what seller makes
consumer goods
goods created for general consumption
capital goods
goods used to produce other goods
investment
the money spent by businesses to improve their production
productivity
the amount of output for a given amount of input
three economic questions
what goods and services should be produced?
how should these goods and services be produced?
who consumes these goods and services?
economic system
the method used by a society to produce and distribute goods and services
centrally planned economy (communism)
government owns all resources and answers all three economic questions for its people
free market economy (capitalism)
little government involvement in the economy
mixed economy
a system with free market but also some government regulation/intervention
productivity creates wealth
countries with free markets, property rights, and The Rule of Law have historically seen greater economic growth
production possibilities curve (PPC)
a model that shows alternative ways an economy can use its scarce resources
ceteris paribus
making nothing more and nothing less than predicted (never happens)
constant opportunity cost
resources are easily adaptable in a PPC for producing either goods
increasing opportunity cost
as you produce more of any good the opportunity cost (production of another good) will increase
three PPC shifters
change of resource quality/quantity
change in technology
change in trade (allows for more consumption)
capital goods and future growth
capital good growth causes positive PPC growth
Note 
Flashcard (100)