Chapter 2 Terms Flashcards
Per Capita GDP
The dollar value of GDP divided by total population; average GDP.
- people based measure of economic performance
- doesn’t tell us how much of the output each person gets
- indicator of how much output the average person would get if all output were divided evenly among each person
- GDP in U.S. was about $47,000 which means that the average U.S. citizen consumed $47,000 worth of goods and services
Economic Growth
An increase in output (real GDP); an expansion of production possibilities.
- produce more output
- PPC moves outward
Factors of Production
Resource inputs used to produce goods and services, such as land, labor, capital, entrepreneurship.
-ovens, buildings, tools, tractor, fields, human effort, technology…
Human Capital
The knowledge and skills possessed by the workforce.
- it’s not the number of people that you have that’s important, it’s the skills of the workers
- college degree helps this
Capital-Intensive
Production process that uses a high ratio of capital to labor inputs.
-U.S. farmer works with computers, automated irrigation systems, and mechanized equipment (tractor)
V.S.
-Indian farmer works mostly with hands still..
Productivity
Output per unit of input- for example, output per labor hour.
- educated workers + sophisticated equipment = more output
- amount of output produced by the average worker
- American households are able to consume so much because American workers produce so much
- high productivity of u.s. economy results from having educated workers and a capital intensive production process
Production Possibilities
The alternative combinations of final goods and services that could be produced in a given period with all available resources and technology.
- when technology advances, an economy can produce more output
- PPC curve shifts outward
Externalities
Cost (or benefits) of market activity borne by a third party.
- external costs of production
- protecting environment
- so factories won’t pollute air and harm people as well as environment
Monopoly
A firm that produces the entire market supply of a particular good or service.
-prevents individual business firms from becoming too powerful
(Mr. Sneed’s air company on The Lorax)
-protects consumers from paying too much for something because only one business has a certain product
-gov. Regulates pricing, advertising, safety, and other things to protect consumers
(Testing of safety for new drugs, food…)
Degree of scarcity
Can run out
Seats in a stadium
Free good
Never ending supply
-water, air, dirt
Doesn’t have an official price tag
Utility
How beneficial it is
- hard to measure
- time, place, form
Oven in home is a consumer……
Consumer good
Oven, like one in home, in a restaurant is a capital….
Capital good
Equity
Equal?
Price freeze
