Economics chapter 3 and 4 terms

It is a universal principal of wealth that it is….

Eventually consumed. It moves from what is more useful to us, to what is less useful.

The motive of production is….

Human need

The three natural divisions of wealth are:

1. Subsistence

2. Interest

3. Rent

The standard of subsistence of any human society

The amount of production that makes work worth-while. Below that minimum, individuals die of famine or immigrate.

Interest on money

The claiming of non-existent profit on money because it is leant. It is also know as usury.

Interest on Real Capital (or simply interest)

Capital that is saved solely for being consumed in production and without which wealth cannot be produced. It is the minimum worth-while of capital below which wealth cannot be produced.

The law of diminishing returns

This states that, as long as the method of production remains the same, the returns of increasing capital will be greater in amount but less in proportion to the total capital employed.

The margins of production

This is derived from the most men will work for the least amount of capital.

Rent

This is the surplus over and above the minimum required by labor and capital out of the total produce.