| A | B |
|---|
| scarcity | resources are limited, human wants are unlimited |
| economics | the study of scarcity |
| consumer | buyer, one who uses a good or service |
| producer | seller, one who produces a good or service |
| factors of production | land, labor, capital, entrepreneurship |
| land | all natural resources used in production |
| labor | human effort used in production |
| capital | tools and machinery used in production |
| entrepreneurship | business owner, risk taker, assembles other factors of procution |
| goods | physical things that can be produced and purchased |
| services | work that one does for another for payment |
| incentive | benefits offered people to act in certain ways |
| utility | usefulness or satisfaction received from the use of a good or service |
| economize | make decisions based on what YOU believe is the best combination of costs and benefits |
| rational self interest | principle that all choices people make are the based on economizing |
| opportunity cost | the value of the next best choice when you make a decision |
| production possiblities curve | graph that shows all combinations of goods that can be produced with limited resources |
| marginal cost | additional cost of using another unit of a good or service, or engaging in an activity |
| marginal benefit | additional benefit of consuming another unit of a good or service, or engaging in an activity |
| efficiency | the maximum number of goods and services are being produced with resources available |
| underutilization | producing less than what is possible with limited resources |
| law of increasing opportunity costs | as production of one good increases, greater amounts of another good must be given up |
| macroeconomics | study of economy as a whole |
| microeconomics | study of individual players in an economy |
| positive economics | statements that tell it like it is |
| normative economics | statements that impose value judgements or state what "should be" |
| economic systems | the way a society uses resources to satisfy people's wants |
| private property rights | things owned by people or businesses are theirs to use how they choose |
| TANSTAAFL | "There ain't no such thing as a free lunch" |
| economic bad | a good that people would pay to have less of |
| trade-off | the decision to give up one thing for another |
| rent | payment for land |
| interest | payment for capital |
| wages | payment for labor |
| profit | payment for entrepreneurship |
| ceterus peribus | all other things being equal or unchanged |
| constant opportunity cost | A constant trade off, 1 banana for 2 coconuts |
| fallacy of composition | belief that if something is good for one person it is good for all people |
| association as causation | belief that if two events occur together, one caused the other |
| comparative advantage | One society can produce a good at a lower opportunity cost than another |
| absolute advantage | one society can produce more of something than another |
| specialization | a person or society produces one specific good and trades for the rest of goods and services desired |
