Chapter 1 Flashcards
S1) Need
Sometime essential for survival
S1) Want
Something that people desire but that is not necessary for survival
S1) Goods
The physical objects that someone produces
S1) Services
The actions or activities that one person performs for another
S1) Scarcity
The principle that limited amounts of goods and services are available to meet unlimited wants
S1) Economics
The study of how people seek to satisfy their needs and wants by making choices
S1) Shortage
A situation in which consumers want more of a good or service than produces are willing to make available at a particular price
S1) Entrepreneur
A person who decides how to combine resources to create goods and services
S1) Factors of production
The resources that are used to make goods and services
S1) Land
All natural resources used to produce goods and services
S1) Labor
The effort people devote to tasks for which they are paid
S1) Capital
Any human-made resource that is used to produce other goods and services
S1) Physical capital
The human-made objects used to create other goods and services
S1) Human capital
The knowledge and skills a worker gains and through education and experience
S2) Trade-off
The act of giving up one benefit in order to gain another, greater benefit
S2) “Guns or butter”
A phrase expressing the idea that a country that decides to produce more military goods (“goods”) has fewer resources to produce consumer goods (“butter”) and vice versa
S2) Opportunity cost
The most desirable alternative given up as the result of a decision
S2) Thinking at the margin
The process of deciding whether to do or use one additional unit of some resource
S2) Cost/benefit analysis
A decision-making process in which you compare what you will sacrifice and gain by a specific action
S2) Marginal cost
The extra cost of adding one unit
S2) Marginal benefit
The extra benefit of adding one unit
S3) Production possibilities curve
A graph that shows alternative ways to use an economy’s productive resources
S3) Production possibilities frontier
A line on a production possibilities curve that shows the maximum possible output an economy can produce
S3) Efficiency
The use of resources in such a way as to maximize the output of goods and services
S3) Underultillization
The use of fewer resources than an economy is capable of using
S3) 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
