Economics Chapter 1 Test
Terms
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- Economics
- the study of scarcity and choice
- Scarcity
- limited quantities of resources to meet unlimited wants
- Choice
- the act of selecting or making a decision when faced with two or more possibilities
- Goods
- tangible products that we use to satisfy our wants and needs
- Services
- intangible activities that are performed by other people for money; productive acts that satisfy economic wants
- Consumption
- the act of buying final goods and services
- Consumer
- one who buys goods and services for personal use
- Factors of Production
- a resource (such as labor, land, or capital) that is used to produce a good or service
- Human resources
- the people whose efforts and skills go into the production of goods and services
- Labor productivity
- output per worker per time period
- Technology
- a culture's methods and tools for making things
- Standard of living
- the quantity and quality of goods and services available to an individual or society
- Renewable Resources
- one capable of being replaced or renewed
- Capital/Capital Goods/Capital Resources
- goods used to produce other goods
- Entrepreneurship
- the process of bringing together the factors of production
- Entrepreneurs
- a person who gathers together the factors of production to create and operate a business enterprise in the hope of earning profits
- Allocate
- to assign parts of a whole
- Marginalism
- the evaluation of the usefulness of adding one more of an item to the production of a good or service
- Opportunity Cost
- the amount of goods or services that must be done without in order to obtain another good or service
- Command Economy
- one in which decisions to allocate resources are made by the government
- Traditional Economic System
- one in which resources are allocated according to tradition and custom, and people make a living in the same way as they have done for a long time
- Market Economy
- one in which the allocation of resources is determined by the free operation of the forces of supply and demand and market prices
- Microeconomics
- the study of the effects of economic forces on individual parts of the economy
- Macroeconomics
- the study of the forces affecting the economy as a whole
- Ceteris Paribus
- the assumption that all things other than what is being considered will stay the same
- Economic Model
- a simplified representation (verbal, graphic, or mathematical) of an economic problem
- Mediums of exchange
- something readily accepted in payment for goods or services
- Standard of value
- a way to measure the worth of what is bought and sold
- Store of value
- any form of commodity, asset, or money that has value and can be stored and retrieved over time
- Currency
- the part of the money supply consisting of paper money and coins
- Legal Tender
- a currency that by law must be accepted in payment of debt
- Fiat money
- all forms of U.S. currency that have value because the government says it does
- Token money
- coins whose metallic value is less than their face value
- Checks
- a written order directing a depository institution to pay a sum of money
- Trade-Off
- the giving up of one thing to obtain something else
- Capital Formation
- the production of capital goods
- Production Possibilities Curve
- a graph showing the various combinations of goods and services that an economy might produce if all its resources were fully and effectively employed
- Luxury
- a nonessential good or service that adds comfort and pleasure to life
- the four factors of production
- human resources, natural resources, capital resources, and entrepreneurship
- How does human resources influence the production of goods and services?
- the SIZE of the workforce and LABOR PRODUCTIVITY affect the amount of goods and services produced
- Productivity is affected by
- skill of the labor force, quality and quantity of machinery and tools available per worker, and technology
- What can be strengthened to improve living standards?
- labor, capital, and management
- Shortages of natural resources prompt the governments to enact laws that would either:
- limit the consumption of nonrenewable resources or require the restocking of renewable resources
- deprecation
- the decline in value of capital goods
- barter
- swapping something of value for whatever it was that they wanted
- "fractional currency"
- coins; called this because the government produces them primarily for the convenience of making change for a dollar
- Economic System
- the way a society answers the what, how, and who questions