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Fratrik Honors Econ
Unit One Vocab - Basic Econ Concepts - Chapter 1, 2, 3
| Term | Definition |
|---|---|
| capital | manufactured goods used to make other goods and services. |
| macroeconomics | the branch of economics that is concerned with the overall ups and downs in the economy. |
| economics | the study of scarcity and choice. |
| market economy | an economy in which decisions of individual producers and consumers largely determine what, how, and for whom to produce, with little government involvement in the decisions. |
| entrepreneurship | the efforts of entrepreneurs in organizing resources for production, taking risks to create new enterprises, and innovating to develop new products and production processes. |
| microeconomics | the branch of economics that studies how people make decisions and how those decisions interact. |
| labor | the effort of workers. |
| land | all resources that come from nature, such as minerals, timber, and petroleum. |
| economic system | organized way a society provides for the wants and needs of its people. |
| opportunity cost | the real cost of an item: what you must give up in order to get it. |
| resource | anything, such as land, labor, and capital, that can be used to produce something else; includes natural resources (from the physical environment) and human resources (labor, skill, intelligence). |
| scarcity | the condition that results from society not having enough resources to produce all the things people would like to have. |
| economic growth | an increase in the maximum amount of goods and services an economy can produce. |
| model | a simplified representation of a real situation that is used to better understand real-life situations. |
| efficient | describes a market or economy that takes all opportunities to make some people better off without making other people worse off. |
| production possibilities curve | illustrates the trade-offs facing an economy that produces only two goods; shows the maximum quantity of one good that can be produced for each possible quantity of the other good produced. |
| Factors of Production | resources required to produce the things we would like to have. |
| Marginal Analysis (cost-benefit analysis) | making decisions based on the extra cost and extra benefit of a choice |
| Marginal Benefit or Utility | the extra benefit or usefulness of one more unit of a good or service. |
| Marginal Cost | the cost of producing one extra unit of a good or a service. |
| traditional economy | The use of scarce resources stems from ritual, habit, or custom |
| command economy | economic system characterized by a central authority that makes most of the major economic decisions |
| capitalism | private citizens own and use the factors of production in order to generate profits. |
| mixed economy | economic system that has some combination of traditional, command, and market economies. |
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