Economics Flashcards

Flashcards for Economics Lecture Review

Scarcity

The condition that results from society not having enough resources to produce all the things people would like to have.

Economics

The study of how people try to satisfy unlimited and competing wants through the careful use of scarce resources.

Need

A basic requirement for survival, including food, clothing, and shelter.

Want

A way of expressing a need.

Factors of Production

Resources required to produce the goods and services we would like to have; includes land, capital, labor, and entrepreneurs.

Land

Refers to the 'gifts of nature' or natural resources such as mineral deposits and fertile fields.

Capital Goods

Tools, equipment, machinery, and factories used in the production of goods and services.

Financial Capital

Money used to buy the tools and equipment used in production.

Labor

People with all their efforts, abilities, and skills, but does not include entrepreneurs.

Entrepreneurs

Individuals who start new businesses or bring a product to market.

Production

The process of creating goods and services when all factors of production are present.

Gross Domestic Product (GDP)

The dollar value of all final goods and services produced within a country in a 12-month period.

Goods

Items that economically satisfy an economic want, such as books, cars, or CD players.

Consumer Goods

Goods meant for final use by the consumer.

Capital Goods

Manufactured goods used to produce other goods and services.

Services

Work or labor performed for someone, such as haircuts or home repairs.

Consumers

A person who uses goods and services to satisfy wants and needs.

Value

Worth that can be expressed in dollars and cents.

Paradox of Value

The observation that some necessities have little value, whereas some non-necessities have a much higher value.

Utility

The capacity to be useful and provide satisfaction; varies from person to person.

Wealth

The accumulation of tangible, scarce, useful, and transferable products from one person to another.

Market

A location or mechanism that allows buyers and sellers to exchange a certain economic product.

Factor Markets

Markets where productive resources are bought and sold.

Product Markets

Markets where producers sell their goods and services to consumers.

Economic Growth

Occurs when a nation's total output of goods and services increases over time.

Productivity

The measure of the amount of output produced by a given amount of inputs in a specific period of time.

Division of Labor

Arranging work so that individual workers do fewer tasks than before.

Specialization

When factors of production perform tasks that they can do relatively more efficiently than others.

Human Capital

The sum of people's skills, abilities, health, and motivation.

Economic Interdependence

The relationship of relying on others and others relying on oneself to provide goods and services that are consumed.

Trade-Offs

Alternative choices whenever someone makes an economic decision.

Opportunity Cost

Cost of the best alternative use of money, time, or resources when one choice is made rather than another.

Production Possibilities

A diagram representing various combinations of goods and/or services an economy can produce when all productive resources are fully employed.

Cost-Benefit Analysis

A way of thinking about a problem that compares the costs of an action to the benefits received.

Free Enterprise

An economic system in which consumers and privately owned businesses, instead of the government, make the majority of the WHAT, HOW, & FOR WHOM decisions.

Standard of Living

The quality of life based on possession of the necessities and luxuries that make life easier.