Econ part 1

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23 Terms

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Economics
\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`\`The study of how people seek to satisfy their needs and wants by making choices.
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Scarcity
Limited amounts of goods and services that are available to meet unlimited wants.
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TINSTAAFL
“There is no such thing as free lunch” acronym for the idea that everything has a cost forces us to have to make choices.
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Shortage
When consumers want more of a good or service than producers are willing to make available at a particular price.
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Goods
Physical objects that someone produces ex. food clothing video games
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services
actions or activities that one person performs for another usually for a fee ex. medical care
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Factors of production
The resources used to make all goods and services.
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Land
All natural resources used to produce goods and services ex. water, iron, coal, forests
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Physical capital
All human made goods that are used to produce other goods and services, ex tools,factories
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entrepreneurs
People who decide how to combine resources to create new goods and services.
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trade-off
Act of giving up one benefit in order to gain another, great benefit.
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guns or butter
Choices that government face when choosing whether to spend money on the military or domestic needs.
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Opportunity cost
The most desirable alternative somebody gives up as a a result of a decision.
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Thinking at the margin.
Deciding to use one additional unit of some resource
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Production possibilities curve
A graph that shows alternative ways to use an economys resources
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underutilization
Using fewer resources than an economy is capable of using.
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Efficiency
Using resources in such a way as to maximize the output of goods and services.
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Utility
The capacity to be useful to someone, the most important reason for buying something.
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economy
All the activity in a nation that together affects the production, distribution, and use of goods and services.
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Relationship between marginal cost and marginal benefit when deciding to add an additional unit-
If the marginal benefit is greater than the cost it would be a good idea to add a additional unit. But if the cost is higher than the benefit its not a good idea to add another unit.
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How might a business or a nation’s use a production possibilities curve
A business or nation can decided how best to use its resources.
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What does a country’s production possibilities depend on.
Its technological level and the resources it has available.
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