quiz 1 intro to econ Flashcards
(18 cards)
define economics
the study of how societies make decisions about ways to fulfill wants and needs
econ is separated into macroeconomics and microeconomics. define each.
macro- big picture including growth and employment. choices made by large groups. micro- how individuals make economic decisions
what are the 5 economic questions facing society
what to produce, how to produce it, for whom to produce, how much to produce, and who gets to make these decisions
what are resources
the things used to make other goods
what is scarcity
unlimited wants and needs but limited resources. this is the fundamental economic problem.
what is a trade off
decisions involving picking on thing over another due to limited resources (scarcity)
what is the result of a trade off
the opportunity cost (opportunity lost)
how is the value of something determined
by comparing it to the value of the next best option
what are capital goods
goods used to make other goods
what are consumer goods
final product directly purchased by the customer
what are the four factors of production. the definition, and each one
what is needed to make goods. land, labor, capital (tools/machinery/factories) and entrepreneurship (investment of time and money)
what is specialization
dividing production so that goods are produced efficiently. the result of division of labor, where different people perform different jobs to achieve greater efficiency
fixed cost
amount of money businesses must pay in a time period (ex. rent)
what is variable cost
the amount of money a business pays that changes over time (ex. labor, raw materials)
what is marginal cost
additional cost of the next unit produced
profit
total cost minus revenues.
total cost
fixed plus variable cost
profit motive
being in business to make money
