economics beginning

Flashcards by kmwan8, updated more than 1 year ago
Created by kmwan8 over 6 years ago


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Capital The physical plant, machinery and equipment used to produce other goods. Capital goods are human-made goods that do not directly satisfy human wants.
Economic growth The ability of an economy to produce greater levels of output, represented by an outward shift of its production possibilities frontier.
Economic system A system of production and exchange of goods and services as well as allocation of resources in a society.
Incentive Is something that motivates an individual to perform an action.
Land A shorthand expression for any resource provided by nature.
Microeconomics The branch of economics that studies decision-making by a single individual, household, firm or industry.
Opportunity Cost The best alternative sacrificed for a chosen alternative.
Relative scarcity The condition in which human wants are forever greater than the available supply of time, goods, services and resources.
Technology The body of knowledge applied to how goods and services are produced.
Ceteris paribus A Latin phrase that means that while certain variables change, ‘all other things remain unchanged’
Economic model Numerical table graph or mathematical equation used to describe what is expected to happen in reality. Economics is a social science, involving human beings and their behaviors, so the models can never be perfect. Rather, they are a close approximation of what is reasonable to expect to happen.
Economics The study of how society chooses to allocate its scarce resources to the production of goods and services in order to satisfy unlimited wants.
Investment The process of producing capital, such as factories, machines and inventories.
Macroeconomics The branch of economics that studies decision-making for the economy as a whole.
Mixed economy Is an economic system that is variously defined as containing a mixture of markets and economic planning. A mixture of free market with government intervention.
Positive Economics An analysis limited to statements that are verifiable.
Resources/factors of production The basic categories of inputs used to produce goods and services. Resources are also called factors of production. Economists divide resources into three categories: land, labor and capital.
Command economy Also known as Planned. Refers to an economic system whereby decisions regarding production and investment are made by a central authority. (for example, Government)
Economic problem Relates to scarce resources and the three main economic question: 1. What to produce, 2. How to produce and 3. For whom to produce.
Entrepreneurship The creative ability of individuals to seek profits by combining resources to produce new or existing products.
Labour The mental and physical capacity of workers to produce goods and services.
Market A place where forces of demand and supply operate, and where buyers and sellers interact.
Normative economics An analysis based on value judgement.
Production possibilities frontier(PPF) Is an economic model. The curve shows all the possible maximum combinations of two products that can be produced in an economy, given its available resources and technology.
Self-interest This involves members of the community respecting the laws while they pursue their own individual goals.
Enterprise Entrepreneurship is a special type of labor-the creative ability of individuals to seek profits by combining resources to produce.
The economic way of thinking using economic models to help understand and predict the impact of changes in economic variables.
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