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Fundamentals of Economics

Published on Aug 05, 2016

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1.

Fundamentals of Economics

By: kenzie Harville
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Economics: The study of how people seek to satisfy their needs and wants by making choices

Photo by MIGreenberg
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Goods and Services

  • Good: a product that is produced
  • Service: actions or activities that one person performs for another
Photo by Walmart Corporate
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Needs and Wants

  • Need: an item that is necessary for daily life(ex:water)
  • Want: an item that is desired (ex:jewelry)
Photo by Brian Smithson (Old Geordie)
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Shortage and scarcity

  • Shortage: occurs when producers will not or can not offer goods of services to the consumer
  • Scarcity: implies a limit on the quantities of resources
Photo by bryanesque
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Opportunity cost

The cost of the next most desirable item that you gave up for another 
Photo by sharpstick's photos
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Trade off

an alternative that we sacrifice when we choose an action over another
Photo by duncan
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4 Factors of production

  • Land: all natural resources used to produce goods or services
  • Labor: the effort by people devoting their time to complete a task for payment
  • Capital: physical=human made objects used to create other goods and services Human=the knowledge and skills a worker gains through experience
Photo by JiayiYoung
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Entrepeneurs

a person who takes a risk to start a business
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marginal cost

The additional cost of producing one more unit of a good
Photo by reynermedia
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Marginal Benifit

the additional cost of consuming one more unit of a good
Photo by Analog Weapon
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Production POSSIBILITies curve

a production possibilities graph that shows alternative ways that AN ECONOMY CAN USE ITS RESOURCES
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Rational decisions

occurs when the marginal benefits of an action equal or exceed the marginal cost
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three types of economic sytems

  • Traditional: economic decisions are based upon custom and historical precedent
  • Command: in a centralized economy government planning groups make basic economic decisions
  • Market: in a decentralized economy economic decisions are guided by the changes in prices that occur as individual buyers and sellers interact in the market place
Photo by Toastwife
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mixed economy

an economy that has no pure market or command economy
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Profit motive

the desire to make money causing people to work hard to produce goods and services
Photo by pheezy
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consumer sovereignty

the extent to which people are free to choose in the market place without governement regulation
Photo by marcp_dmoz
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competition

when businesses compete with other businesses fro sales and profit
Photo by kylemac
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GOVERNMENTAL regulation

the extent to which the government intervenes into buyers and sellers in the market place
Photo by vgm8383
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economic freedom

the freedom for consumers to decide what to spend their money on and the freedom for businesses to decide which goods to produce
Photo by c_ambler
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economic security

protection against economic risks
Photo by andjohan
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economic equity

the application of our concepts WHAT is (fair/unfair) or (right/wrong) to an economic policy
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economic growth

increasing the production of goods and services over time
Photo by Wired Photostream
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economic efficiency

a situation in which no one in a society can be made better off without making someone else worse
Photo by mag3737
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economic stability

the process of maintaining stable prices full employment and keeping stable economic growth
Photo by infomatique

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