Chapter 1 vocab Flashcards
Something like air, food, or shelter that is necessary for survival
Need
An item that we desire but that is not essential to survival
Want
The study of how people seek to satisfy their needs and wants by making choices
Economics
Physical objects such as clothes or shoes
Goods
Actions or activities that one person performs for another
Services
Limited quantities of resources to meet unlimited wants
Scarcity
A situation in which a good or service is unavailable
Shortage
Land, labor, and capital; the three groups of resources that are used to make all goods and services
Factors of production
Natural resources that are used to make goods and services
Land
The effort that people devote to a task for which they are paid
Labor
Any human made resource that is used to create other goods and services
Capital
All human made goods that are used to produce other goods and services, tools and buildings
Physical capital
The skills and knowledge gained by a worker through education and experience
Human capital
Ambitious leaders who combines land, labor, and capital to create and market new goods and services
Entrepreneur
An alternative that we sacrifice when we make a decision
Trade off
A phrase that refers to the trade offs that nations face when choosing whether to produce more or less military or consumer goods
Guns or butter
The most desirable alternative given up as the result of a decision
Opportunity cost
A graph that shows alternative ways to use an economy’s resources
Production possibilities curve
The line on a production possibilities graph that shows the maximum possible output
Production possibilities frontier
Using resources in such a way as to maximize the production of goods and services
Efficiency
Using fewer resources than an economy is capable of using
Underutilization
The alternative that is given up because of a decision
Cost
As we shift factors of production from making one good or service to another, the cost of producing the second item increases
Law of increasing costs
