Chapter 1 Flashcards
Want
A desire that’s not necessary
Need
Something essential for survival
Economics
A science that deals with resources for fulfilling needs and wants
Goods
The physical objects that someone produces
Services
The actions or activities that one person performs for another
Scarcity
limited amounts of goods/services are available to meet unlimited wants
Shortage
A situation in which consumers want more of a good or service than producers are willing to make available at a particular time
Factors of production
Land labor capital (entrepreneurs): the three groups of resources that are used to make all goods and services
Land
Natural resource used to make goods or services
Labor
The effort that people devote to a task for which they paid
Capital
Any human made resource that is used to produce other goods and services
Physical capital
Objects that are used to produce other goods
Human capital
Knowledge or skills workers get from education and experience
Entrepreneur
Person who takes a risk in combining the other 3 factors to create a new good
Trade off
The act of giving up one benefit in order to gain another greater benefit
Guns or butter
Military good produces more than consumer goods
Opportunity cost
The most desirable thing you give up
Thinking at the margin
Deciding whether to do/use 1 additional unit of some resource
Production possibilities curve
Graph that shows alternative ways to use an economy’s productive resources
Production possibilities frontier
A line on a production curve that shows the maximum possible output an economy can produce
Efficiency
To use the 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
Cost
Money,time etc
Law of increasing cost
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
