Terms - Intro to Econ

The social science that deals with how a society allocates its scare resources among its unlimited

Economics

Goes on the axis of a PPG

good/services

The most desirable alternative given up as a result of a decision

Shortage

Central to a society in a Traditional Economy

Family Unit

The concentration of productive efforts on a limited number of activities

Specialization

The doctrine that states that the government should generally not intervene in the marketplace

laissez-faire

The process of choosing which needs to be satisfied and how much of our resources will be used to satisfy them

allocation

The line connecting all the “normal” points on a PPG

Frontier

All natural resources in an economic sense

Land

The combination of social and individual decision making a society uses to answer the basic economic questions

Economic Systems

Person or group in the same residence

House Hold

Those that buy and use goods and services

consumers

A graph showing the alternative ways an individual or society uses its resources

Circular flow chart

Human made/based resources used to produce other goods and services

Capital

Using more human and labor than machines

Labor-intensive

How labor is divided in a Traditional Economy

Gender lines

Exchange from Firm to Household

Product Market

When a good become outdated or non-functional after a short or specified time

planned obsolesce

That which we desire but is not essential for survival

Want

The skill in acquiring and managing the factors of production

Entrepreneurship

The skills and knowledge gained by a worker through experience

Human Capital

Three economic questions answered by the Government

Command Economy

Money gained before costs

Revenue

Expectation, good or bad, that encourages a certain behavior

Incentive

When a good is long lasting

Durable

Condition when a good or service is unavailable at the current price

Shortage

Effort a person devotes to a task for which they are paid

Labor

All human made objects used to create other goods or services

Physical Capital

Using more machines than human labor

Capital Intensive

Three economic questions answered by social customs, habit and ritual

Traditional Economy

Person or group in the same residence

Household

Exchange from household to firm

Factor Market

One’s personal gain

Self-Intrest

Struggle among firms for household money

Competition

Physical object a person buys and uses

good

Those things necessary for survival

Need

Condition when wants and needs are unlimited but resources need to produce goods and services to meet wants and needs are limited

scarcity

Financial gain in a transaction after costs

profit

Self-regulating nature of the marketplace

Invisible hand

Motivating force in a Free Market Economy

Self-Intrest

Organizations that use resources to produce and sell

Firm

What is the major difference (in terms of time) between scarcity and shortage?

Scarcity - Always exists
Shortage - Temp.

What are the Four Factors of Production?

Land,Labor, Capital, and Entrepreneurship

What two things help determine for whom goods and services will be produced?

Consumers and Prices

What are the Three Basic Economic Questions?

1 - What
2 - How
3 - For whom

What are the Four Basic Economic Systems?

Traditional, Command, Market, Mixed

What are the Four Rules of a Market Economy?

1 - Self-Intrest
2 - Incentive
3 - Competition
4 - “Invisible hand”