Basic Economic Concepts
The condition that forces people and societies to make choices because resources are limited and wants are unlimited.
What is Scarcity?
The four resources used to produce goods and services.
What are land, labor, capital, and entrepreneurship?
The term "Marginal" refers to this kind of change in cost or benefit.
What is an additional or extra unit?
One of the seven U.S. economic goals that focuses on the ability to make your own economic choices.
What is economic freedom?
every society must answer these three basic economic questions.
What are:what to produce, how to produce, and for whom to produce?
The acronym T.I.N.S.T.A.A.F.L. reminds us that every choice has a cost.
What is "There is no such thing as a free lunch"?
This factor includes natural resources like water, oil, and timber
What is land?
Rational decision-makers continue an activity as long as this benefit is greater than its cost.
What is Marginal Benefit?
Programs like social security and unemployment insurance help achieve this goal
What is economic security?
Economic decisions are based on customs and tradition.
What is a traditional economy?
When you choose one option, this term describes the value of the next best thing you give up.
What is an opportunity cost?
The skills, training, and education of workers that increase productivity
What is Human Capital?
or
What is Labor?
The law stating that each additional unit of consumption gives less satisfaction than the previous one.
What is diminishing marginal utility?
A society reaches this goal when it uses resources to their fullest potential without waste.
What is economic efficiency?
The government controls the factors of production and sets prices.
What is a command economy?
The most desirable alternative sacrificed when a decision is made.
What is a trade-off?
The machines, tools, and buildings used to make other goods.
What is Capital?
If a firm's marginal cost is $8 and the marginal revenue is $10, it should do this.
Whatn is produce more units?
This goal involes fairness in wages, hiring, and distribution of wealth.
What is economic equity?
buyers and sellers make decisions based on supply, demand, and prices.
What is a market economy?
This explains why diamonds are expensive while water, which is essential, is cheap.
What is the paradox of value?
The person who takes a risk of starting a new business and organizes the other factors.
Who is an entrepreneur?
The point where marginal benefit equals marginal cost indicates this optimal decision.
What is allocative efficiency?
or
Maximum net benefit
When everyone who wants a job has one and prices stay steady, these two goals are balanced.
What are full employment and price stability?
Most countries today combine elements of both a market and a command economy.
What is a mixed economy?