Principles of Economics Study guides, Class notes & Summaries

Scarcity - The condition that arises because wants exceed the ability of resources to satisfy them. Economics - The social science that studies the choices that individuals, businesses, governments, and entire societies make as they cope with scarcity, the incentives that influence those choices, and the arrangements that coordinate them.

capitalism - Economic system in which private citizens own and use the factors of production in order to generate profits. command economy - Economic system characterized by a central authority that makes most of the major economic decisions.

Which of the following situations would lead to more starvation? A) a world where everyone grows his or her own food and there is no trade B) a world with trade and lots of specialization C) a world with immense division of knowledge D) a world where only some people specialize in food and everyone else produces something else -

capitalism - Economic system in which private citizens own and use the factors of production in order to generate profits. command economy - Economic system characterized by a central authority that makes most of the major economic decisions.

Scarcity - A situation in which unlimited wants exceed the limited resources available to fulfill those wants Production Possibilities Frontier (PPF) - A curve showing the maximum attainable combinations of two goods that can be produced with available resources and current technology

allocative efficiency - when the mix of goods produced represents the mix that society most desires budget constraint - all possible consumption combinations of goods that someone can afford, given the prices of goods, when all income is spent; the boundary of the opportunity set comparative advantage -

circular flow diagram - factors of production - markets for goods and services -

Economics - the study of how humans make decisions in the face of scarcity Scarcity - human wants for goods, services and resources exceed what is available Division of labor -

Scarcity - Economics - Efficiency -

Scarcity - the limited nature of society's resources Economics - the study of how society manages its scarce resources Efficiency -