Economics unit 1 terms

study of choice; how a society allocates scarce resources to achieve max satisfaction (wants and needs)

something we would LIKE TO HAVE but is NOT NECESARY for survival (cheeseburger)

BASIC REQUIREMENT for survival (food, shelter, water, air, clothing)

choices made by INDIVIDUALS, HOUSEHOLDS, AND BUSINESSES/ FIRMS, small scale

LARGER SCALE, economy as a WHOLE, GOVERNMENT policy and decision (unemployment and inflation)

tangible/ PHYSICAL product

action/ performance experienced by the consumer

human wants are greater than the capacity of available resources to provide for those wants, FUNDAMENTAL ECONOMIC PROBLEM facing all societies

Desirable and with limited quantity, wants>quantity available

money already SPENT and CANNOT BE RECOVERED, should NOT be a part of decision making

what to produce, how to produce, for whom to produce

unlimited wants/needs but limited resources

the resources we need to make all goods and services

land, labor, capital, entrepreneurship

all the NATURAL RESOURCES found on the planet, not processed by humans (fertile land, water, oil, timber)

physical effort put into making goods or providing services

any human-created resource that is used to produce other goods/ services

tangible/ human made stuff that aids in production (tractor)

knowledge and skills (knowing how to plow land skill)

process of launching/ running a business in order to make money (who's in charge?), takes on financial risk and should know other 3 factors of production

measured in $, all FINAL products including goods and services, only measures things produced WITHIN COUNTRY'S BORDERS

traditional, market, mixed, command

INDIVIDUALS, rather than the state, own most resources; includes land, labor, and capital

system where all goods and services are driven by BELIEFS AND CUSTOMS

production, investment, prices, and incomes are determined centrally by government

options we GIVE UP to OBTAIN WHAT WE WANT

cost of the SECOND CHOICE that you gave up to get what you wanted, value of your forgone opportunity is the real cost of the decision

There Is No Such Thing As A Free Lunch, there is ALWAYS an opportunity cost

way of thinking about a choice that compares the cost of the action to its benefits (when making decisions, Olympics)

combination of things that can be produced when ALL RESOUCES ARE BEING USED, using all resources to produce something (dots on the line are efficient)

if you produce at the inefficient dot, you're NOT FULLY UTILIZING ALL YOUR RESOURCES

An opportunity cost that remains the same as consumers shift purchases from one product to another along a straight-line budget

Once all factors of production are at maximum output and efficiency, producing more will cost more than average. AS PRODUCTION INCREASES, OPPORITUNITY COST INCREASES