Chapter 1: Introduction to Economics Vocabulary

Vocabulary flashcards covering basic economic terms, scarcity, division of labor, micro and macroeconomics, and positive vs. normative economics from Chapter 1.

Economics

The study of how humans make choices in the face of scarcity.

Scarcity

The scenario when human wants for goods, services, and resources exceed what is readily available.

Goods

Physical products that people produce and consume to satisfy wants or needs.

Services

Activities performed for people that satisfy wants or needs but do not result in a physical product.

Resources

The inputs used to produce goods and services.

Poverty

A condition in which a person has insufficient income or resources to meet basic needs such as food, housing, clothing, and healthcare.

Scarcity will ________ even eithout poverty

continue

How do we get Scare Goods?

1. Produce them ourselves

2. “Trade” for goods that other’s produce

Division of Labor

The separation of production into distinct, specialized tasks.

Specialization

Focusing on a specific task in the production process.

Economies of Scale

When increasing production causes the average cost of each unit of a good or service to fall.

Microeconomics

Focuses on the actions of individual agents (persons, firms, organizations) in the economy.

Macroeconomics

Focuses on the economy as a whole, including growth, unemployment, inflation and international trade.

“Economies is not a ‘___ science’ - it’s a _______ science”

hard/harder

Positive Economics

The study of what is, was, or will be that can be tested using facts or evidence.

Normative Economics

The study of what ought to be that is based on values, opinions, or judgements.

Traditional Economy

older and traditional (little economic progress)

Command Economy

economic effort is devoted to goal passed down from a ruler or ruling class (govt. decided) ex: ancient Egypt

Market Economy

decision making is decentralized

Gross Domestic Product

measure the size of total production in an economy