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Flashcards in Chapter 1 Deck (24)
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1
Q

scarcity

A

lack of resources available to meet all human wants

2
Q

wants

A

desires that can be met by consuming products; unlimited and ever changing

3
Q

needs

A

things necessary for survival

4
Q

goods

A

physical objects that can be bought

5
Q

services

A

work one person does for another pay

6
Q

consumer

A

person who buys a good or service for personal use

7
Q

producer

A

person who makes a good or provides a service

8
Q

what will be produced?

A

societies must decide on a mix of goods to produce, depends on their natural resources; some countries allow producers and consumers to decide, in other countries the government decides

9
Q

how will it be produced?

A

decisions on production methods involve using resources efficiently; unskilled labor force: might use labor intensive methods, skilled labor force: might use capital intensive methods

10
Q

for whom will it be produced?

A

how they are distributed involves two questions: how should each person’s share be determined? how will goods and serviced be delivered to people?

11
Q

factors of production

A

land, labor, capital, entrepreneurship

12
Q

incentives

A

benefits that encourage people to act in certain ways

13
Q

utility

A

benefit or satisfaction gained from using a good or service

14
Q

opportunity cost

A

the value of the next best alternative a person gives up, not the value of all possible alternatives

15
Q

cost-benefit analysis

A

examining cost, expected benefits of choices

16
Q

marginal cost

A

additional cost of using one more unit of good or service

17
Q

marginal benefit

A

additional benefit of using one more unit of good and service

18
Q

efficiency

A

producing the maximum amount of goods and services possible

19
Q

underutilization

A

producing fewer goods and services than possible

20
Q

microeconomics

A

studies behavior of individual players in an economy (individuals, families businesses)

21
Q

macroeconomics

A

studies behavior of economy as a whole (inflation, unemployment, aggregate demand and aggregate supply)

22
Q

positive economics

A

describes and explains economic behavior as it is

23
Q

normative economics

A

studies what economic behavior should be

24
Q

Adam Smith

A

founder of modern economics, wrote “An Inquiry into the Nature and Causes of the Wealth of Nations”