Economics Unit 1 Test Vocab

Microeconomic

study of individual businesses and choices

Macroeconomics

The study of thee total effects that the national and global economy has on thee individual

Scarcity and Choice

The Economic Problem that resources are scarce while want in unlimited. So choice is required when competing for resources.

The Margin and Change

Decisions made by individuals, firms, and the government based on choices at the margin. Once behavior has been optimized any change will be detrimental as long as conditions stay the same.

Equilibrium and Efficiency

Prices are set by markets, and are always moving in and out of Equilibrium and varies with efficiency, in different ways at different times

Regulation and Equity

There is a trade-off between the freedoms of a firm or individual or greater social equality and equity through the government regulation of individuals and markets

Progress and Development

How societies can progress in measurable money terms and develop in a more normative sense.

Opportunity Cost

the best thing you must give up to get it.

Marginal Cost

What you give up to get one additional unit of it

Marginal Benefit

The benefit of a one unit increase in an activity. It is measured by what you're willing to give-up to get one additional unit of benefit

Production

The process of creating goods and services in an economy

Consumption

The process consumers satisfy their wants and needs

Four Factors of Production

Land, Labor, Capital, Entrepreneur

Land

Natural Resources

Labor

Human Resources

Capital

Man-made aide to production

Entrepreneur

Organize production and willing to take risks

Four Factors of income

Rent, Wages, Interest, Profit of loss

Rent

Income paid for the use of land

Wages

Income paid for the services of labor

Interest

Income paid for the use of capital

Profit of loss

Income earned by entrepreneur

Short Run

Time period when a firm can only change some and not all factors of reproduction (Typically if labor is increased or decreased)

Long Run

Time period when all production factors are variable (Building a new factory)

Very Long Run

Time period when all key inputs into production are variable (Government regulations, technology etc.)

Specialization

Where individuals and firms, regions, and nations concentrate on producing some goods and services rather than others. Allows for increased production of goods and services but has its own risks.

Division of Labor

Where a manufacturing process is split into a sequence of individual tasks

Economic Structure

The way an economy is organized in terms of sectors.

Primary Sector

Things like agriculture, fishing and activities such as mining and oil extraction

Secondary Sector

The wide range of manufacturing activities found in an economy Ex. Food Processing, textiles, and clothing, iron & steel production

Tertiary Sector

The service sector - retail transport logistics.

Quaternary Sector

The Knowledge-based part of the economy especially the provision of information. Ex. Scientific research.

BRICS

Brazil, Russia, India, China, and South Africa