The Nature of Economics

These flashcards cover key concepts in economics as outlined in the lecture notes.

Economics

A social science that studies how individuals and organizations make choices regarding the use of limited resources to satisfy unlimited wants.

Scarcity

The condition that exists because human wants are unlimited while resources to satisfy those wants are limited.

Opportunity Cost

The value of the next best alternative sacrificed when a choice is made.

Factors of Production

Resources used to produce goods and services, including land, labor, capital, and entrepreneurship.

Land (in economics)

Natural resources used in production, such as land, minerals.

Labour

Human effort used in production, typically referring to workers.

Capital

Man-made resources used to produce other goods, such as machinery and equipment.

Entrepreneurship

The ability to combine the other factors of production to create goods and services.

Economic Agents

Participants in the economy, including households, firms, and government.

Households

Economic agents that own factors of production and supply labor to firms.

Firms

Organizations that use factors of production to produce goods and services with the aim to maximize profit.

Government (in economics)

The entity that provides public goods and services and redistributes income.

Positive Economics

Economic analysis based on objective evidence that can be tested.

Normative Economics

Economic statements based on judgments and opinions that cannot be tested scientifically.