H - Econ. Chaps 1-4 Flashcards by Inkheart Wilde

The creation / addition of utility

Production

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Ability of the good / service to satisfy a want

Utility

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The sum of all goods and services produced by an economy over a given time

Total product

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The allocation of the total product among the productive resources

Distribution

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All natural, synthetic, and human inputs that are used in creating goods and services

Productive Resources

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Study of how people and institutions within a society make choices and how these choices in turn determine the use of society’s scarce resources

Economics

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The time and effort expended by human being
______

All the resources of the land, sea, and air
being
______

Goods used to produce other goods and services
______

The act of organizing and suing the risks of a business venture
______

Labor, land, capital, and enterprise

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A person who organizes and assumes the risks of a business venture .
Combines the oath productive resources (LLC) to produce a final product

Entrepreneur

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What are the problems of distribution?

Market Economy comprised of:
Wages, rent, interest profits.

It’s a barter economy

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The use of a good or service.

May be the most important functions economics because it’s the ultimate end result of economic activity

Consumption

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Economic goods and services are what 3 things?

Useful, scarce, and transferable

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Difference between a service and a good?

Services are intangible

Goods have a utility and satisfy a want to be economic goods

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Type of good:

Lacks the element of scarcity and therefore has no price

Free good

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Type of good:

An economic good to the supplier but a fee good to the user

Public good

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Type of good:

Goods directly used by individual,s households, and businesses

Consumer goods

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Things of value owned at a particular time

Wealth and Income (Stock and Flow)

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The stock of labor talents and skill use to increase productivity

Human Capital

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The total value of the goods and services produced over a period of time

Total Income

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An organized boy of knowledge that is coordinated, arr., and systemic ex according to general laws or principles

Science

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A study of behavior and interaction of human beings, individually and in groups

Economics

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Difference between economic theory vs. economic policy

E. Theory - Develops rules and principles of economics and is a guide for action under a given set of circumstances
E. Policy - Action actually taken under a given set of circumstances

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Difference between Positive and Normative Economics

Positive - Scientific study of “what is” among economic relationships
Normative - Area dealing w/ “what ought to be”

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The value of 1+ or 1- unit, opportunity cost

Marginal Analysis

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A supposition that something is true without proof

Assumption

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Action consistent with a given goal

Rational Behavior

A position of stability or rest where the qty. supplied equals the qty. demanded

Equilibrium

An action that is beneficial to an individual may not be beneficial if done by a group

Fallacy of Composition

Saving by individuals or families is desirable for it increases capital formation, but if a large no. of people

Paradox Shift

When government compensates for individuals and firms for large-scale losses it creates a climate of greater risk and losses in future

Moral Hazard

What lies at the heart of economics and is the driving force for business choices?

Scarcity

Most of us must make decisions as to how to spend our money to

Maximize our satisfaction due to our limited resources

Choices of businesses are restricted by...

Competition Government Regulations Production Costs Tech

On a national level policy makers must also make important economic decisions that reflect

Costly alternative

The total output and standard of living of any nation depend on the extent of the nations

Labor Land Capital Enterprise

Shows the alternative combinations of different goods and services that a society can produce given its available resources and tech

Production Possibilities Curve

The value of the next best alternative that must be sacrificed when a choice is made

Opportunity Cost

True or False | The production possibilities curve can be curved inward or outward

False | It is ALWAYS curved Outward

If you are inside the curve of the production possibilities could mean

That you are inefficient, experiencing natural disasters, or etc.

Increasing total output and profits would be a way to cultivate

Economic Growth

True or False | The U.S. has an excellent combination of the resources

True Labor - Skill, versatile mobile Land - Plentiful supply of land and natural resources Capital - Greats amount of capital in the world Enterprise - Entrepreneurial skills

Some areas of the world lack proper ____ of land, labor, and capital required to high level production

Ratio

Process of limiting the scope of an economic units productive efforts instead of trying to produce everything it needs

Specialization

The process of trading surplus

Ability to produce a good or service using fewer resources than other producers use

Absolute advantage

The ability to produce a good or service at a lower opportunity cost than other producers face

Comparative advantage

Main questions of macroeconomics

1. What goods and services to produce, and what quantities? 2. How are goods/services produced? 3. Who gets what is produced?

- The incentive for obtaining and using resources to produce goods and services that consumers will buy - The excess of revenue over all costs of production

Profit

In a ____ situation the producer by using resources to make a profit increases the well-being of other people

Model

In an economic system the ultimate use of ____ and other resources and the ______ of goods/services are determined primarily by consumer demand

Labor, allocation

Individuals express their through what for Goods/Services

Prices

The opportunity to make profits is a(n) ____ for business to produce goods/services

Incentive

For payments business obtain the revenue they need to purchase the ___,____,____ necessary for producing more goods/services

Labor, land, capital

Rivalry among individuals and firms for sales to consumers The natural regulator that makes the free market system It protects customers from shoddy products If it is effective the economy functions efficiently without overseer

Competition

Chap. 3. | The role of prices

Allocate resources | Prices ration consumer demand

4 Major forms of business organization

Sole Proprietorship -Business owned by 1 person Partnership - Business owned by 2+ people Corporation -Separate legal entity apart from its owners or shareholder which functions as a business Cooperatives -Business owned by the people who use it or buy from it

Producers in a market economy seek the business of individual buyers by...

Underprice firms Putting out a better product Giving better service

Government-Regulate Markets

``` Public Utilities Airlines Agricultural markets Banking Industry Number of taxicabs in. Cities Number of establishments that can serve alcoholic beverages ```

Economy that contains a mixture of perfect and imperfect competition no of regulated and unregulated industries

Mixed Economy | The U.S. is a primary example

The removal of government regulations to better help competition

Deregulation

The quantity purchased of a g/s is inversely related to the price all other things being equal

Law of supply and demand

Quantities of a g/s at a specific price over a give period of time

Quantity of demand

A schedule of the total quantities of a g/s that purchasers will buy

Demand ?? Check chap 4

The quantity of a good or service that an individual or firm stands ready to buy at various prices at a given time

Individual demand

The sum of the individual demands in the marketplace

Market demand

A table showing the various quantities of a g/s

Demand schedule

Check chap 4

Demand Curve

Movement along the demand curve which occurs

Cha

Determinates of Demand

``` Changes in Income Changes in tastes and preferences Changes in the prices of elated goods and services -substitutes -compliments ```

Total qty. of g/s that sellers stand ready to sell at a different prices in a give time

Supply

The specific amount that a seller would be willing to offer for sale at a particular price

Qty. Supplied

Determinants of Supply

Changes in the cost of resources Changes in Tech/(efficiency) Expectations of future prices Prices of related products

The price at which quantity demand and quantity of supplied

Equilibrium