Untitled Flashcards Set

Economics

The study of how man allocates scarce resources, which have alternative uses, to achieve given ends or goals.

Economy

A system of production, distribution, and consumption of goods and services in a given geographic area.

Scarcity

The fundamental economic problem of having seemingly unlimited human wants in a world of limited resources.

Choice

The decision made when faced with the reality of scarcity, leading to a selection among alternatives.

Opportunity Cost

The value of the next best alternative foregone when making a choice.

Money Cost

The actual monetary expenditure incurred when purchasing a good or service.

Production Possibility Frontier (PPF)

A curve that illustrates the maximum feasible amount of two goods that a country can produce using available resources efficiently.

Efficiency (in terms of PPF)

Achieving maximum output from available resources, represented by points on the production possibility frontier.

Adam Smith's definition of economics

'An inquiry into the nature and causes of the wealth of nations'.

J.S. Mill's definition of economics

'The practical science of the production and distribution of wealth'.

Alfred Marshall's definition of economics

'The study of mankind in the ordinary business of life'.

Economic Efficiency

A situation where resources are allocated in a way that maximizes the production of goods and services.