Untitled Flashcards Set

Scarcity

Refers to the limited resources available to satisfy the unlimited wants and needs of people.

Economics

The study of how people choose to use limited resources to satisfy the unlimited wants and needs of people.

Microeconomics

The branch of economics that studies the behavior of individuals and smaller firms in the economy.

Macroeconomics

The branch of economics that studies the economy as a whole.

Economize

To maximize the benefits and reduce costs.

Effective

A particular use of resources that achieves a desired end, doing the right things.

Efficient

The use of minimum resources to achieve a desired end, doing things right.

Equitable

The fair and just distribution of economic resources.

Utility

The usefulness, satisfaction, or benefit derived from each available option.

Util

A theoretical unit of satisfaction that a person gains from consuming an item.

Opportunity Cost

The value or benefit that must be given up to achieve something else; the next best alternative.

Accounting Cost

The explicit monetary value of taking action; payments made to others in the course of running a business.

Factors of Production

Resources that are used to produce goods and services; includes land, labor, capital, and entrepreneurship.

Production Possibilities Frontier

The curve representing the maximum amount of two items that can be produced with a given amount of resources.

Law of Increasing Relative Cost

The increase in relative cost of producing one item in terms of the cost of another that could be produced with the same resources.

Law of Diminishing Returns

The eventual decline in the rate of extra output produced when one input is held constant and other inputs increase.

Law of Increasing Returns to Scale

As production increases, the percentage change in output is greater than the percentage change in inputs.