Econ Vocab Quiz 1

Shortage

Temporary market imbalance where buyers want more of an item that’s available at it’s current price.

Scarcity

Permanent economic fact that human wants are unlimited but the world’s resources are finite. (always there in some form, like water)

Factors of production

land, labor, capital, & enterpreneurship. Used to create goods and services (inputs)

Trade off

Act of giving up 1 benefit or item to gain another, driven by the reality of scarce resources.

Opportunity cost

Valve of the next- best alternative you give up when you make a choice. (form of a trade off)

Production possibilites curve

Graph that shows the max amount of 2 goods an economy can make when it uses all it’s resources and tools well.

Circle flow model

Visual economic diagram that shows how $, goods, & services move in a continuous loop between households & business.

Laws of supply

As the price of a good or service goes up, the quantity that producers are willing to supply also goes up.