you make a trade-off when you give up something in order to get something else (what you are gaining is the trade-off)
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Resource/Factor of Production
anything that can be used to produce something else
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Land
all resources that come from nature, such as timber, wind, and petroleum
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Labor
the effort of workers
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Capital
manufactured goods used to make other goods and services
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Entrepreneurship
the efforts of entrepreneurs in organizing resources for production, taking risks to create new enterprises, and innovating to develop new products and production processes
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Scarcity
when unlimited wants exceed limited resources
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Opportunity Cost
the value of the next best alternative (choice) that you have given up in order to get an item
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Macroeconomics
concerned with the overall ups and downs of the economy (large scale)
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Household
a person or group of people that share their income
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Firm
any organization that produces goods or services for sale
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PPC
the Production Possibilities Curve illustrates the necessary trade-offs in an economy that produces only two goods
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Ceteris Paribus
"other things equal" means that all other relevant factors remain unchanged
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Efficient
there are no missed opportunities - there is no way to make some people better off without making other people worse off
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Economic Growth
an increase in the maximum amount of goods and services an economy can produce
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Trade
providing goods and services to other and receive goods and services in return
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Specialization
when each person focuses on the task that they are good at performing
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Comparative Advantage
having the lowest opportunity cost among the people or countries that can produce that good or service
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Absolute Advantage
being able to produce more of a good or service with the given amount of time and resources
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Terms of Trade
the rate at which one good can be exchanged for another and have both parties benefit
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Quantity Demanded
the amount of a good or service consumers are willing and able to buy at some specific price. It is shown as a single point in a demand schedule or along a demand curve
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Demand Curve
a graphical representation of the demand schedule. It shows the relationship between quantity demanded and price
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Law of Demanded
states that a higher price for a good or service, all other things being equal, leads to people to a smaller quantity demanded of that good or service
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Change in Demand
a shift of the demand curve, which changes the quantity demanded at any given price
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Movement along the Demand Curve
a change in the quantity demanded of a good that is the result of a change in that good's price
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Substitutes
goods that are meant to be used in place of one another. a rise in the price of one of the goods leads to an increase in demand for the other good
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Complements
goods that are bought together to be used together. a rise in the price of one of the goods leads to a decrease in demand for the other good
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Normal Good
when a rise in consumer income increases the demand for the good and vice versa
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Inferior Good
when a rise in consumer income decreases the demand for the good and vice versa
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Quantity Supplied
the actual amount of a good or service people are willing to sell at some specific price
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Supply Curve
the relationship between the quantity supplied and the price
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Law of Supply
states that all other things being equal, the price and quantity supplied of a good are positively or directly related
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Change in Supply
a shift of the supply curve, which indicates a change in the quantity supplied at any given price
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Movement along the Supply Curve
a change in the quantity supplied of a good arising from a change in the good's price
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Input
a good or service that is used in the production of another good or service
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Tax
treated as an input cost, these are fees producers must pay to the federal government
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Subsidy
treated as an input cost, these are payments from the government to producers to assist in the production of certain goods or services that are deemed beneficial to society
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Substitutes in Production
goods that producers can use the same inputs to make either one good or the other
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Complements in Production
goods are treated as these if increased production of either good creates more of the other good
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Equilibrium
the point where QS \= QD. this is the intersection point between the supply and demand curve
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Surplus
also known as excess supply and caused by a price floor, this exists at a price above equilibrium where QS \> QD
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Shortage
also known as excess demand and caused by a price ceiling, this exists at a price below equilibrium where QS < QD
Studied by 18 people
