Chapter 1: What is Economics? Flashcards Preview

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Flashcards in Chapter 1: What is Economics? Deck (20):
1

sacrcity

the fundamental and universal economic problem.
=the inability to get everything we want

2

economics

the social science that studies the choices that individuals, businesses, governments and entire societies have to make as they cope with scarcity.

3

microeconomics

the study of choices that individuals and businesses make, the way these choices interact in markets, and the influence of governments.

4

macroeconomics

the study of the performance of the national economy and the global economy.

5

goods and services

the objects that people value and produce to satisfy human wants.

6

factors of production (list 4)

land
labor
capital
entrprenuership

7

land

"gifts of nature" ex. land, minerals and water used to produce goods and services.

8

labor

the work time and work effort people devote to producing goods and services.

9

human capital

the quality of labor depends on _____ _____

10

capital

tools, instruments, machines, buildings and other constructions that businesses use to produce goods & services.

11

financial capital

money, stocks, bonds

12

entreprnuership

the human resources that organizes land, labor, and capital.

13

what do they earn?
land=___
labor=___
capital=___
entrepreneurship=___

land=rent
labor=wages
capital=interest
entrepreneurship=profit

14

tradeoff

an exchange- giving up one thing to get something else.

15

rational choices

people make rational choices= they compare the costs and benefits and then make the choice that achieves the greatest benefit over cost.

16

opportunity cost (of something)

is the highest-valued alternative that must be given up to get it.
not all the alternatives foregone, it is ONLY the highest-valued.
all tradeoff involves an opportunity cost.

17

marginal benefit

the benefit that arises from an increase in an activity

18

marginal cost

the opportunity cost of an increase in an activity

19

margin

choices that compare the marginal benefit of a small change to the marginal cost of the small change are said to be made at the ___

20

economic model

a description of some aspect of the economic world that includes only those features of the world that are needed for the purpose at hand.