Chapter 1 Flashcards
(12 cards)
What are the three core choices confront every nation?
- WHAT to produce with our limited resources.
- HOW to produce the goods and services we select
- FOR WHOMS goods and services are produced; that is, who should get them.
_____ is the aggregation of individual production and consumption decisions.
The economy
What are the four types of factors of production?
- Land
- Labor
- Capital
- Entrepreneurship
Resources are called _______
Factors of production
- Not just “ground”
- Includes all natural resources
- e.g. oil, water, iron, energy, air, etc.
Land
- Not just people or “bodies”
- Quantity and quality of Human Resources
- Their skills and abilities
Labor
Final goods produced for use in production of other good and services. Includes equipment and structures, such as: factories, production machinery, fleet vehicles, computers phones and printers
Capital
Assembling of resources to produce new or improved products and technologies.
- It’s not just a matter of what resources you have but also of how well you use them.
- Management and innovation
- UD managers and entrepreneurs are VERY innovative.
Entrepreneurship
The lack of enough resources to satisfy all desired uses of those resources.
Scarcity
What does scarcity imply?
Scarcity of resources limits the amount of production that can be undertaken.
-Requires choices to be made.
The study of how best to allocate scarce resources among competing uses.
Economics
The next most desired goods and services foregone to obtain the chosen good or service.
- What is given up to undertake a chosen activity.
- Associated with every decision….for example, if we choose to produce bread then we cannot produce pizza crust with the same flour.
- Classic example is guns vs. butter
Opportunity cost
