Economic Way of Thinking
Not required for survival.
Want
The "next additional unit."
Marginal
Required for survival.
Need
What is another name for factors of production?
Productive Resources
A system of production and exchange of goods and services as well as allocation of resources in a society.
Economic System
Something that will motivate an action or effort from an individual.
Incentive
What is the opportunity cost of choosing to go into work instead of college?
Losing the chance of a higher education/losing higher pay
Branch of economy dealing with the behavior and decision making of small unites such as individuals or firms like the decreasing price of computers.
Microeconomics
The efforts of innovative individuals to develop new and better products, means of production, or methods for marketing goods and services.
Entrepreneurship
Economic system in which economic decisions are based on customs and beliefs that have been handed down from generation to generation.
Traditional Economy
The basic economic problem that results from a combination of limited resources and virtually unlimited wants.
Scarcity
A change in total benefit as a result of an additional unit.
Marginal Benefit
Branch of economy dealing with the economy as a whole and decision making by large units such as governments or unions like unemployment trends.
Macroeconomics
Natural resources like oil, trees, or water.
Land
Economic system in which the government or central planners control the factors of production and makes all decisions about their use.
Command Economy
Give an example of an economic interaction.
Varies. Buying dinner, making a long-distance phone call, etc.
When you buy a newspaper from a vending machine typically you pay the price of one paper but you have the opportunity to take as many as you want. Why?
Marginal Cost/Marginal Benefit
Limited to explanation of economic situations. What exists and why.
Positive Economics
Human Resources used to create goods and services.
Labor
Economic system in which individuals own the factors of production and make economic decisions through free interaction while looking out for their own self-interest.
Market Economy
What is economics?
Social science that studies how people choose to allocate scarce resources in order to satisfy their needs and wants.
Fill in the blanks:
If I bought 1 box of pizza for $20, my marginal cost would be ________.
If I added a second box for a total cost of $35, my marginal cost would be __________.
If I added a third box for a total cost of $______, my marginal cost would be $10.
1. $20
2. $15
3. $45
Studies the problems of economics and develops possible solutions to fix it. Tries to correct and avoid problems.
Normative Economics
Resources and goods made and used to produce other goods and services like tools, factories, buildings, equipment, etc.
Capital
What to produce, How to produce (or how much), For whom to produce