Economics > EXAM > Principles of Economics (All)

Principles of Economics

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Market Economy - ANSWER a free exchange between buyers and sellers, driven by supply and demand Command Economy - ANSWER government determines who, how and for whom to produce goods and services Traditional Economy - ANSWER revolves around family-based goods and service transaction, focused on tradition Mixed Economy - ANSWER market economy with some government intervention Needs - ANSWER Things we must have to survive Wants - ANSWER Things we desire but are not necessary for survival. Goods - ANSWER a product meant for sale or consumption in a market Services - ANSWER an action, rather than physical goods, are transferred from the seller to the buyer Factors of Production - ANSWER Land, labor, and capital used to make all goods and services. Land - ANSWER Natural resources used to produce goods and services. Labor - ANSWER Human effort directed toward producing goods and services for which they are paid Capital - ANSWER Man-made resources used to make other goods and services. Entrepreneur - ANSWER Person who puts the factors of production together to create a new good or service. Risk - ANSWER the uncertainty that an entrepreneur accepts while they create a good or service Scarcity - ANSWER Limited quantities of resources to meet unlimited needs and wants. Trade-off - ANSWER a compromise where you give up one thing in exchange for something else Opportunity Cost - ANSWER Value of the best alternative not chosen. TINSTAAFL - ANSWER There is No Such Thing As A Free Lunch - Every thing has a cost, sometimes hidden Guns - ANSWER Describes a country's military production (weapons, tanks, soldiers, etc.) Butter - ANSWER Describes a country's consumer goods production (clothes, food, shelter, etc.) Marginal Benefit - ANSWER The additional satisfaction to a consumer from consuming each additional unit. Marginal Cost - ANSWER Additional cost of producing each additional unit Production Possibilities Curve - ANSWER Shows all possible combinations of two goods that can be manufactured. Efficiency - ANSWER using resources in such a way as to maximize the production of goods and services Underutilization - ANSWER Using fewer resources than an economy is capable of using Economic Growth - ANSWER When a country gets more land, labor, or capital, increasing production possibilities. Households - ANSWER people who live together and consume products together Firms - ANSWER a business organization that sells goods or services to make a profit Resource Market - ANSWER where firms go to buy materials they will need to produce their good or service Product Market - ANSWER where firms go to sell the goods or services they have already produced Economics - ANSWER Study of choices people make to satisfy their unlimited needs and wants with limited resources.

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