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Econ ch. 1-2
| Term | Definition |
|---|---|
| Economics | Production of material goods and services Science of efficiency |
| Economic systems | Systems that organize society to produce goods and services |
| Economics is concerned with | How society allocates scarce resources to try to fulfill unlimited wants Society’s wants will always outnumber the resiurces |
| Capitalism | Private individuals control the economy |
| Socialism | Government controlled economy |
| Globalization | Increased trade between nations and foreign investment Leads to specialization, imports, and lower self-sufficiency |
| Factors of production | Land Labor Capital Entrepreneurial ability |
| Physical Capital | All manufactured resources |
| Human Capital | Accumulated training and education and workers |
| Entrepreneur | Person who organizes, manages, and assembles other resources |
| Services | Tasks preformed for someone else (intangible goods) |
| Scarcity | Wants forever greater than supply |
| Opportunity cost | Next-best alternative that must be given up in order to obtain something or satisfy a want |
| Production possibility curve | Graph representing all possible combinations of maximum outputs that could be produced |
| Assumptions of economic models | * Fully employed resources * Production over a specific time period * Fixed resources * Technology doesn't change |
| Consumer goods | Directly satisfy wants (in the present) |
| Capital | Used to make other goods (for the future) |
| More capital goods | Investment in the future economy, more consumer goods in the future |
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