Introduction to Economics Flashcards

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Questions and Answers

What is Economics?

Economics is the study of how people seek to satisfy their needs and wants by making choices.

What does Scarcity imply?

Scarcity implies quantities of resources to meet unlimited wants.

What is the difference between Scarcity and Shortage?

A shortage is a temporary situation whereas scarcity is always present.

What are Goods?

Goods are physical objects such as food, clothing, cars, electronics, etc. Signup and view all the answers

What are Services?

Services are actions or activities performed for another person. Signup and view all the answers

What are Scarce Resources?

All resources are scarce because the land, labor, and capital used to create them are scarce. Signup and view all the answers

What are the Factors of Production?

Land, Labor, and Capital. Signup and view all the answers

What does the term Land refer to in economics?

All natural resources used to produce goods and services. Signup and view all the answers

What is Labor in economic terms?

The effort that a person devotes to a task for which he is paid. Signup and view all the answers

What is Capital in economics?

Any human-made resource used to produce other goods and services. Signup and view all the answers

What is Physical Capital?

Human-made objects used to create other services. Signup and view all the answers

What is Human Capital?

Knowledge and Skills that people invest in themselves. Signup and view all the answers

Who are Entrepreneurs?

People who decide how to combine land, labor, and capital resources. Signup and view all the answers

What are Trade Offs?

All the alternatives given up when choosing one course of action over another. Signup and view all the answers

What are Opportunity Costs?

The most desirable opportunity given up as a result of a decision. Signup and view all the answers

What is a Production Possibilities Curve?

A curve that shows alternative ways to use a country's resources. Signup and view all the answers

What is a Production Possibilities Frontier?

The line drawn to show combinations of production of both choices. Signup and view all the answers

What does Efficiency mean in economics?

Using resources in such a way as to maximize output of goods and services. Signup and view all the answers

What is Underutilization?

Using fewer resources than the economy is capable of using. Signup and view all the answers

What is the Law of Increasing Costs?

As production switches from one item to another, more resources are necessary to increase production of the second item. Signup and view all the answers

Study Notes

Understanding Economics

Economics explores how individuals satisfy needs and wants through choices.
It addresses the challenge of scarcity, where desires exceed resource availability.

Scarcity vs. Shortage

Scarcity is a constant state due to limited resources compared to unlimited wants.
A shortage is a temporary condition, occurring when suppliers cannot provide goods at existing prices.

Goods and Services

Goods: Tangible products like food, clothing, and electronics.
Services: Intangible actions provided by one person to another, like haircuts or tutoring.

Resources and Factors of Production

All resources are scarce, including land, labor, and capital used in production.
Factors of Production consist of Land, Labor, and Capital, which are essential resources for creating goods and services.

Components of Factors of Production

Land: Refers to natural resources such as water, trees, and minerals.
Labor: The effort devoted to tasks for payment, including skilled professions and unskilled labor.
Capital: Human-made resources like machinery and buildings that aid in production.
- Physical Capital: Tangible items like tools and equipment.
- Human Capital: Knowledge and skills gained through education and experience.

Role of Entrepreneurs

Entrepreneurs combine land, labor, and capital to create goods and services.
They take on risks to innovate, start businesses, and contribute to economic growth.

Trade-offs and Opportunity Costs

Trade-offs represent all alternatives forgone when choosing one action over another.
Opportunity Cost refers to the most valued alternative sacrificed, such as choosing a computer over a vacation.

Production Possibilities

Production Possibilities Curve illustrates various ways to utilize a country's resources.
Production Possibilities Frontier indicates the maximum efficient production levels.

Efficiency and Utilization

Efficiency means optimizing resource use for maximum output of goods and services.
Underutilization occurs when resources are not fully employed to their potential.

Law of Increasing Costs

As production shifts from one item to another, more resources become necessary to boost the output of the second item.

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Description

Explore the fundamental concepts of economics with these flashcards. Understand key terms like scarcity and the choices individuals make to satisfy their needs and wants. This quiz serves as an engaging way to grasp the basics of economic principles.