Introduction to Economics Unit 1

Vocabulary flashcards covering the fundamental concepts of economics, including types of resources, Maslow's hierarchy of needs, and the Production Possibilities Curve.

Economics

A social science that studies the principles governing the effective utilization of limited resources with numerous alternative applications to satisfy multiple needs, specifically addressing human actions, activities, and behaviour.

Microeconomics

The branch of economics that deals with applications on an individual level, studying entities such as households and businesses, their choices, and their interaction in specific markets and industries.

Macroeconomics

The study of the economy as a whole, focusing on total economic activity levels such as Gross Domestic Product (GDP), inflation, unemployment, and economic growth.

Scarcity

The condition where limited economic resources are insufficient to satisfy the unlimited wants and needs of everyone, forcing individuals and societies to make choices.

Needs

Basic things required for human survival, such as food, water, clothes, shelter, and jobs.

Wants

Things that human beings desire which are unlimited and for which there is only a demand if there is money available to pay for them.

Natural Resources (Land)

Inputs obtained from nature, including raw materials, water, coal, oil, flora, fauna, and climate; the reward or payment for these resources is rent.

Labor

The human resource representing the physical and intellectual effort of people engaged in production; the payment for this resource is wage.

Capital

The man-made resource consisting of manufactured goods used as inputs in production, including buildings, tools, computers, and machines; the payment for this resource is interest.

Entrepreneurship

The act of organizing the other factors of production and assuming the risk of a business venture; the reward for this driving force is profit.

Physiological needs

The first level of Maslow's classification including basic survival needs such as food, clothes, and a place to live.

Security needs

The second level of Maslow's classification comprising physical and financial security, such as life insurance, pension funds, or property ownership.

Social needs

The third level of Maslow's classification comprising the need for love and contact with other people.

Status needs

The fourth level of Maslow's classification reflecting the need to be recognised and respected by others.

Self-actualisation needs

The highest level of Maslow's classification referring to the desire for personal development and self-advancement.

Opportunity Cost

The value of the next best alternative or the best foregone opportunity that must be sacrificed whenever a choice is made.

Production Possibilities Curve (PPC)

A graphical illustration showing the maximum combinations of two goods that an economy can produce by fully employing all its fixed resources with the best technology available.

Law of increasing opportunity costs

The principle stating that in order to get more of one good, one must give up ever-increasing quantities of another good because resources are not equally suited for the production of both.

Attainable Point

Any point on or inside the Production Possibilities Curve, indicating combinations of goods that can be produced with available resources.

Unattainable Point

Any point outside the Production Possibilities Curve that cannot be reached with the resources and technology currently available.

Economic growth

An increase in the quantity of goods and services produced by a country over time, illustrated by an outward shift (to the right) of the entire PPC.

Economic decline

A reduction of a country's resources that reduces production capacity and shifts the PPC inwards to the left.

Capital goods

Man-made goods produced to be used as inputs in the production of other goods and services.

Consumer goods

Goods produced for final consumption by individuals or households.

Economy

The institutional structure through which individuals in a society coordinate their diverse wants or needs.

Means or resources

The four factors of production (land, labour, capital, and entrepreneurship) used as inputs in the production process which are limited in supply.