Chapter 1 Flashcards
(25 cards)
goods
the physical objects that someone produces
services
the actions or activities that one person performs for another
shortage
a situation in which consumers want more of a good or service than producers are willing to make available at particular prices
• entrepreneur
a person who decides how to combine resources to create goods and services
• land
all natural resources used to produce goods and services
• labor
the effort people devote to tasks for which they are paid
• capital
any human-made resource that is used to produce other goods and services
• physical capital
the human-made objects used to create other goods and services
• human capital
the knowledge and skills a worker gains through education and experience
• trade-off:
the alternatives that we give up when we choose one course of action over another
• “guns or butter”
a phrase expressing the idea that a country that decides to produce
more military goods (“guns”) has fewer resources to produce consumer goods (“butter”) and vice versa
• thinking at the margin:
the process of deciding how much more or less to do
• cost/benefit analysis
: a decision-making process in which you compare what you will sacrifice and gain by a specific action
• marginal cost
: the extra cost of adding a unit
• marginal benefit
the extra benefit of adding a unit
• production possibilities curve:
a graph that shows alternative ways to use an economy’s productive resources
• efficiency:
the use of resources in such a way as to maximize the output of goods and services
• underutilization
: the use of fewer resources than an economy is capable of using
• law of increasing costs:
an economic principle which states that as production shifts from making one good or service to another, more and more resources are needed to increase production of the second good or service
• need:
a situation in which someone or something must do or have something
want
to desire or wish for (something)
scarcity:
rare
economics
the branch of knowledge concerned with the production, consumption, and transfer of wealth.
factors of production:
In economics, factors of production (or productive inputs or resources) are any commodities or services used to produce goods and services
