Unit 1: The Foundations of Economics

These flashcards cover the fundamental concepts of economics, including definitions of key terms, factors of production, and the distinctions between microeconomics and macroeconomics.

Economics

The study of how individuals and societies try to satisfy unlimited wants with limited resources.

Scarcity

The condition forcing choices among alternatives due to limited resources.

Microeconomics

The study of behavior and decision-making by small units, such as individuals and families.

Macroeconomics

The study of the economy as a whole, focusing on large units like governments.

Need

Anything necessary for survival, such as food, water, and shelter.

Want

Anything that is not necessary for survival, such as cars and electronics.

Factors of Production

Resources needed to produce goods and services, including land, labor, capital, and entrepreneurship.

Land (in economics)

Natural resources that exist without human intervention, including geographical resources, animals, and minerals.

Labor

The work people do, also known as human resource, including the production of goods and services.

Capital

Manufactured goods used to produce other goods and services, such as machinery and tools.

Entrepreneurship

The act of taking risks to develop new products and start businesses for profit.

Technology (in production)

The use of science to develop new products and methods for producing and distributing goods and services.

Division of Labor

Assignment of different tasks to individuals to increase productivity and efficiency.

Production

The process a firm uses to transform inputs into outputs, such as goods or services.