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Econ Vocab 1
Your first quiz
| Term | Definition |
|---|---|
| Scarcity | A basic condition that exists when unlimited wants exceed limited productive resources |
| Factors of Production | Land(natural),Labor(human),Capital(capital goods),and Entrepreneurship |
| Shortage | When(where) you need more goods but do not have enough |
| Opportunity Cost | The next best alternative given up when one is confronted with scarcity by making choices (second best) |
| Trade Offs | The alternatives that we give up when we choose one course of action over another |
| Production Possibility Curve | A graph that shows alternative ways to use an economy's productive resources |
| Production Possibility Frontier | A line on a production possibilities curve that shows the maximum possible output an economy can produce |
| Decision Making Grid* | |
| Marginal Cost | The extra cost of adding one unit |
| Marginal Benefit | The benefit of adding adding one unit |
| Thinking-on-the-Margin | (AKA Marginal Revenue)The additional income for selling one additional unit of a good. |
| Specialization | When individuals and businesses do only what they do best |
| Command Economy | An economic system in which a group of central planners make economic plans for the government |
| Market Economy | An economic system in which decisions on the '3 economic questions' are based on the principle of voluntary exchange |
| Mixed Economy | a market-based economic system in which the government has some involvement |
| The 3 Basic Economy Questions | What goods and services will be produced? How will goods and services be produced? Who will consume the goods and services? |
| Consumer Sovereignty | The extent to which people are free to choose in the marketplace without government regulation |
| Efficiency | A situation in which one in a society can be made better off without making someone else worse off |
| Underutilization | The use of fewer resources than the economy is capable of using |
| Productivity | The quantity of output per unit of input |
| Standard of Living | The way of living that is usual for a person, community, or country |
| Voluntary Exchange | A transfer of goods, services, or ideas that someone makes willingly |
| Government Regulation | The extent to which government intervenes in the decisions of buyers and sellers in a market |
| Deregulation | to remove controls on |
| Profit Motive | The desire to make money which motivates or causes people to work hard to produce goods and services |
| Public Goods & Services | Kind of good or service that is purchased by a consumer who desires it and can afford it |
| Market Failure | When either a market transaction affects third parties not involved in the transaction or that a market has difficulty in providing a product. |
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