What is Economics? – Vocab Flashcards

A set of Question-and-Answer flashcards covering basic economics vocabulary from the notes (Need, Want, Scarcity, Factors of Production, and related concepts).

What is Economics?

The study of how people use scarce resources to satisfy unlimited wants.

What is a Need?

A basic requirement for survival.

What is a Want?

A desire for goods or services that is not necessary for survival.

What are Goods?

Tangible items that satisfy wants or needs.

What are Services?

Intangible actions that satisfy wants or needs.

What is Scarcity?

The fundamental economic problem of having limited resources to meet unlimited wants.

What are the foru main Factors of Production?

Land, Labor, Capital, and entrepreneurship/enterprise.

What is Land in economics?

Natural resources used in production.

What is Labor in economics?

Human effort used in production.

What is Capital in economics?

Man-made resources used to produce goods and services.

What is Physical Capital?

The physical tools, machinery, and buildings used in production.

What is Human Capital?

The knowledge, skills, and experience possessed by workers.

What is an Entrepreneur?

A person who organizes and combines the factors of production and takes risks to create goods and services.

What is a Trade-off?

A sacrifice made when choosing between alternatives.

What is Guns or Butter?

A classic trade-off between military spending and civilian goods, illustrating opportunity cost.

What is Opportunity Cost?

The value of the next-best alternative forgone.

What does Thinking at the Margin mean?

Evaluating the costs and benefits of adding or subtracting a small amount of an input or activity.

What is the Production Possibilities Curve (PPC)?

A graph showing the maximum feasible combinations of two goods that can be produced with given resources and technology.

What is the Production Possibilities Frontier?

Another term for the Production Possibilities Curve; shows the maximum combinations of two goods that can be produced with available resources and technology.

What does Efficiency mean in economics?

Using resources in a way that maximizes output; producing on the production frontier.

What is Underutilization?

Producing below the capacity or not using all resources efficiently.

What is Cost in economic terms?

The value of the resources sacrificed to obtain a good or service; often equal to opportunity cost.

What is the Law of Increasing Costs?

As production of one good increases, the opportunity cost of producing additional units rises.

What is a shortage

A situation where the demand for a good or service exceeds its supply, leading to a scarcity in availability.