ECON QUIZ #2

Vocabulary flashcards generated from economics lecture notes covering utility, productivity, production possibilities, factors of production, resources, and types of capital.

productivity

A measure of the output of an economy per unit of input, expressed as $\text{productivity} = \frac{\text{output}}{\text{input}}$

utility

The satisfaction or pleasure one gains from consuming a product/good or from taking an action.

oppurtunity cost

The value of the next best alternative that is given up when making a choice.

marginal utility

The extra satisfaction/pleasure you get from an increase of one additional unit of a good/service.

negative utility

Less satisfaction/pleasure you get from a good/service a second time, making you feel sick.

law of diminishing marginal utility

States that the more we consume of something, the less satisfaction we will get from each unit of it.

production possibilities frontier (PPF)

An economic model, in the form of a line graph, that shows how an economy might use its resources to produce two goods.

production possibilities curve

A graph showing the combinations of two goods that can be produced with a given set of resources.

economic efficiency

The result of using resources in a way that produces the maximum amount of goods/services.

goods

Physical articles that have been produced for sale for use, such as food, clothing, and cars.

services

Work done by someone else for which a consumer, business, or government is willing to pay, such as teaching, gardening, and childcare.

shortage

A lack of something that is desired; a condition that occurs when there is less of a good/service available than people want at the current price.

inputs

Scarce resources that go into the process of producing goods or services.

factors of production

Resources used to produce goods and services: land, labor, and capital.

outputs

Goods/services produced using resources.

production equation

$$\text{land} + \text{labor} + \text{capital} = \text{goods/services}$$

entrepreneurship

The willingness and ability to take risks involved in starting/managing a business.

entrepreneur

An individual who assembles the other inputs to create new goods and services.

land

The "gifts of nature" used to produce goods and services.

perpetual resources

Resources such as sunlight and wind that are widely available and in no danger of being used up.

renewable resources

Resources such as forests, fresh water, and fish that can be replaced as they are used.

nonrenewable resources

Resources such as oil, coal, and natural gas that cannot be replaced and are gone forever once used.

human capital

The knowledge and skill people gain from education, on-the-job training, and other experiences.

correlation

The relationship between a country's level of human capital and its standard of living.

financial capital

Money invested in stocks, bonds, real estate, or business to produce future wealth.

physical capital or capital goods

Concrete productive resources; the tools, machines, and factory buildings that money can buy which matter in the production process.

capital

Tools, machines, and buildings used to produce goods and services.