economics Ch. 1-Ch. 2

the study of economics important because it enables us to…
become better decision makers
manufactured goods needed to produce other goods and services are called
capital goods
division of labor is a characteristic of
assembly line production
the dollar value of all final goods, services, and structures produced within a country’s borders in a single year is
gross domestic product
a popular model used to illustrate the concept of opportunity cost is
the production possibilities frontier
an economy at its production possibilities frontier is operation
at full potential
entrepreneurs are considered the driving force in an economy because they
start new businesses
actions in one part of the country or world that have an economic impact on what happens elsewhere are examples of
economic interdependence
the purpose of government in a command economy is to
make major economic decisions
an example of a market economy is
the US
which group of people ultimately determines the products that a free enterprise economy produces
consumers
the US can best be described as having a
modified free enterprise system
who plays one of the most important roles in a free enterprise system by starting new businesses
entrepreneurs
which of the following is a characteristic of a traditional economy
it discourages new ideas and new ways of doing things
a market economy
doesn’t provide for everyones basic needs
economics
the study of how people try to satisfy their needs through the careful use of scarce resources
capital
tools, equipment, machinery, and factories used in the production of goods and services
scarcity
condition of not having enough resources to produce all the things people want
opportunity cose
money, time, or resources when one choice is made rather than another
labor
people will all their efforts, abilities, and skills
trade-offs
alternative choices made by consumers in the marketplace
standard of living
quality of life based on the ownership of the necessities and luxuries that make life easier
good
tangible item that is economically useful of that satisfies an economic want
productive efficiency
products are being produced in the least costly way, any point on the possibilities curve
allocative efficiency
the products being produced are the ones most desired by society
utility-
marginal-
allocate
satisfaction
additional
distribute
investment
money spend by businesses to improve their production
consumer goods
created for direct consumption
capital goods
created for indirect consumption
services
actions or activities that one person performs for another
four factors of production
land, labor, capital, entrepreneurship
physical capital
any human- made resources that is used to create other goods and services
human capital
any skills or knowledge gained by a worker through education and experience
traditional economy
relies on habit, custom, or ritual
market economy
economic decisions are made by individuals and are based on exchange or trade
command economy
centrally planned economy, the central government rules and controls
mixed economies
market-based economic systems which he government plays a limited role
economic efficiency
making the most of scarce resources