Definitions Flashcards
definitions (31 cards)
Scarcity
The situation of limited resources in relation to unlimited wants
Resources
the inputs used to produce goods and services that meet human needs and wants
Goods
items that satisfy human wants, provide utility or usefulness, and are scarce
services
an act or use for which a consumer, company, or government is willing to pay
Land
all natural resources used in production, including the earth’s surface, water, air, minerals, and other natural resources both renewable and non-renewable
Labour
the human effort, both physical and mental, used in the production of goods and services
Capital
Man-made factors used in the production of other goods and services
Entrepreneurship
the process of starting, organizing, and managing a business venture, typically with the goal of generating profit and creating value
Opportunity cost
the value of the next-best alternative when a choice is made
Demand
The quantity of a good or service that a consumer is both willing and able to buy at each possible price during a given period of time
Quantity demanded
The amount of a good or service that a consumer is both willing and able to buy at a given price during a given period of time
The law of demand
in a given period of time, the quantity of a good demanded is inversely related to its price, ceteris paribus
Law of diminishing marginal utility
As consumption of a good or service increases, the additional satisfaction or utility derived from each additional unit decreases
Substitutes ( Goods in competitive demand)
Goods considered by consumers to be alternatives to each other with a similar level of utility derived from consuming them.
Complementary goods (goods in joint demand)
A pair of goods consumed together to satisfy the same want by the same economic agents.
Derived demand
Demand for one good occurs as a result of demand for another with both goods consumed by different economic agents (prdcs and csrs)
supply
The quantity of a good or service that a producer is both willing and able to sell at each possible price during a given period of time, ceteris paribus
quantity supplied
The amount of a good that a producer is both willing and able to sell at a given price during a given period of time, ceteris paribus
The law of supply
In a given period of time, there is a direct relationship between price and quantity supplied, ceteris paribus.
Law of diminishing marginal returns
adding an additional factor of production results in smaller increases in output
Indirect tax
Levy imposed by government on the production of goods and services.
Specific tax
Tax levied at a fixed rate per physical unit of output (parallel upward shift of graph)
Ad-valorem tax
Tax levied as a percentage of the price per unit of output (pivotal shift of graph)
Subsidy
Provision of money or tax reduction by the government to lower the price of goods and services.
