The social science concerned with how individuals, institutions, and society make optimal (best) choices under conditions of scarcity.
The way economists view things from a unique perspective. The economic way of thinking.
To obtain more of one thing, society forgoes the opportunity of getting the next best thing. The sacrifice is the opportunity cost.
The pleasure, happiness, or satisfaction obtained from consuming a good or service.
Individuals look for a pursue opportunities to increase their utility.
Comparisons of marginal benefits and marginal costs, usually for decision making.
A statement about economic behavior or the economy that enables prediction of the probable effects of certain actions.
The part of economics concerned with individual units such as a person, a household, a firm, or an industry.
Examines either the economy as a whole or its basic subdivisions or aggregates, such as the government, household, and business sectors.
A collection of specific economic units treated as if they were one unit.
Focuses on facts and cause-and-effect relationships.
Incorporates value judgements about what the economy should be like or what particular policy actions should be recommended to achieve a desirable goal (policy economics).
The need to make choices because economic wants exceed economic means.
A schedule or curve that shows various combinations of two products a consumer can purchase with specific money income.
All natural, human, and manufactured resources that go into the production of goods and services.
4. Entrepreneurial Ability
Includes all natural resources ("gifts of nature") used in the production process, such as arable land, forests, mineral and oils, deposits, and water resources.
Consists of the physical and mental talents of individuals used in producing goods and services.
i.e. Logger, retail clerk, teacher, pro football player, nuclear physicist.
Capital goods includes all manufactured aids used in producing consumer goods and services.
i.e. All factory, storage, transportation, and distribution facilities, as well as tools and machinery.
The purchase of capital goods.
Special human resources distinct from labor. Innovator, risk bearer, takes initiative, and creative.
Factors of Production (Inputs)
4. Entrepreneurial Ability
*combined to produce goods and services*
Production Possibilities Curve
The curve displays the different combinations of goods and services that society can produce in a fully employed economy.
Law of Increasing Opportunity Costs
As the production of a particular good increases, the opportunity cost of producing an additional unit rises.
A greater abundance of resources will result in a greater potential output of one or both products at each alternative. The economy will have achieved economic growth in the form of expanded potential output.