need
something necessary for survival; i.e. air, food, shelter, etc.
want
an item we desire but that is not essential to survival
economics
the study of how people seek to satisfy their needs and wants by making choices
scarcity
limited quantities of resources to meet unlimited wants
goods
physical objects such as clothes or shoes
services
actions or activities that one person preforms for another
shortage
a situation in which a good or service is unavailable
land
all natural resources used to make goods & services
labor
effort that people devote to a task for which they are paid
capital
any human-made resource that is used to create other goods and services; two kinds: physical and human
physical capital
all human-made goods that are used to produce other goods and services; tools and buildings
human capital
the skills and knowledge gained by a worker through education and experience
entrepreneur
ambition leader who combines land, labor, and capital to create and market new goods and services
trade-off
an alternative that we sacrifice when we make a decision
guns or butter
a phrase that refers to the trade-offs that nations face when choosing whether to produce more or less military or consumer goods
opportunity cost
the most desirable alternative given up as the result of a decision
thinking at the margin
deciding whether to do or use one additional unit of some resource
production possibilities curve
a graph that shows alternative ways to use an economy’s resources
production possibilities frontier
the line on a production possibilities graph that shows the maximum possible output
efficiency
using resources in such a way as to maximize the production of goods and services
underutilization
using fewer resources than an economy is capable of using
cost
to an economist, the alternative that is given up because of a decision
law of increasing costs
law that states that as we shift factors of production from making one good or service to another, the cost of producing the second item increases
economics
What begins with the idea that not everyone can have what they need and want?
scarcity
Economics is about solving the problem of…
because our needs and wants are greater than our resource supply
Why will scarcity always exist?
factors of production
land, labor, and capital; the three groups of resources that are used to make all goods and services
land, labor, and capital
What are the three factors of production?
because land, labor, and capital are scarce
Why are goods and services scarce?
its technological level and the resources it has available
A country’s production possibilities depend on what two things?
a graph
What shows alternative ways to use an economy’s resources?
efficiency, growth, cost
A production possibilities graph can show what three things?
