Chapter 1 Flashcards
(19 cards)
Define scarce
Not freely available and lacking an infinite source
Define economics
The study of the allocation and use of scarce resources to satisfy unlimited human wants
Define resource
Anything that is consumed directly or used to make things that will ultimately be consumed
What are the four basic resources that society can allocate?
Land, labor, capital, and the entrepreneurship of its people
Define capital
Wealth in the form of money or other assets owned by a person or organization or available or contributed for a particular purpose such as starting a company or investing
Define opportunity cost
The forgone alternative of the choice made
Define forgone
To abstain or refrain from; do without
Define a production possibilities frontier
A graph which relates the amounts of different goods that can be produced in a fully employed society
Define a model
A simplification of the real world that can be manipulated to explain the real world
Define simplifying assumption
An assumption that may, on its face, be silly but allows for a clearer explanation
Define unemployment
A situation that occurs when resources are not being fully utilized
Define attainable
Levels of production that are possible with the given resources
Define unattainable
Levels of production that are not possible with the given resources
Define a circular flow model
A model which depicts the interactions of all economic actors
Define market
Any mechanism by which buyers and sellers negotiate an exchange
Define factor market
A mechanism by which buyers and sellers of labor and financial capital negotiate an exchange
Define foreign exchange market
A mechanism by which buyers and sellers of the currencies of various countries negotiate an exchange
Define goods and services market
A mechanism by which buyers and sellers of goods and services negotiate an exchange
Define optimization assumption
An assumption that suggests that the person in question is trying to maximize some objective
