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What is economics?

Economics is a way of thinking about the causes and consequences of scarcity.


What are primary effects?

The primary effects are things 1st things that happen when a change is made. Outright and visible.


What are the secondary effects?

Secondary effects are the effects that happen after a change. They are mostly indivisible and take decades to uncover.


What is land?

Land means natural resources.


What is labour?

Labour is human resources. (The work you do at the job you have)


What is an entrepreneur?

Entrepreneurs are people who make choices about new ways to combine productive resources. They take risks, hoping for profiting return.


What is opportunity cost?

Opportunity costs are what is forgone when a choice is made. For example, you chose to buy this book. What ever it was, the forgone alternative is the opportunity cost.


What are consumer goods?

Consumer goods are most of the goods and services you spend money on. (Remember that capital goods are produced in order to produce something else, not for consumption.)


What are capital goods?

Capital goods are produced in order to produce something else, not for consumption.


What is the production possibility curve?



What is efficiency?

Efficiency means the absence of waste. An efficient use of resources minimizes costs. So, for efficiency, you need the best available technology the correct combination of land, labour, capital, and one more thing-employment resources. You must not have idle resources.


What is tradition?

Tradition is a Way of making choices based on custom.


What is the command?

In a pure command economy all economic choices are made by government decree and enforced by bureaucrats. Governmental officials decide how to allocate resources, Ration,goods assign jobs, and set prices and wages.


What is a market economy?

A market economy runs by a system of prices. Prices provide information and incentives for choices. In a market economy, many resources are privately owned; individuals and households and businesses make economic choices.


What is a mixed economy?

A mixed economy is one that mixes politics with economics, government with business. It is a mixture of market and command with a bit of tradition included. United States is a mixed economy in which most choices are market driven, but where our various levels of government try to deal with market failures.


What is the invisible hand?

The idea of the invisible hand is when we seek our self-interests, it will benefit our economy and other people, even me!


What is demand?

Demand is the willingness and the ability to pay for a good based on prices and quantities during a certain period of time.


What is the law of demand?

The law of demand states that, other things staying the same, the quantity demanded is more at low prices and less at higher prices.


What are substitutes?

A substitute is a good we can use in place of another product. Margarine is a substitute for butter.


What is technology?

Technology is knowledge and skills. We can think of technology as a set of limits on our abilities to use resources for the production of goods and services.


What are inventions?

Inventions are applications of existing knowledge--new products or new ways of producing things. The combination of steam engines and railcars to make railroads was an invention.


What are innovations?

Innovations are the process of putting inventions to use. Henry Ford did not invent the automobile but he was an innovator, who turned cars from playthings for the rich into transportation for most Americans.


What is economic profit?

Economic profit equals total revenue minus cost of all resources used in production. It is a reward for innovation.


What is scarcity?

Scarcity is measured by limited resources and limitless human wants.