CHPT 1 Definitions

Question 1

NEED

Answer 1

Something essential for survival

Question 2

WANT

Answer 2

something that people desire but isn’t necessary for survival

Question 3

GOODS

Answer 3

physical object that someone produces

Question 4

SERVICES

Answer 4

the actions or activities that one person performs for another

Question 5

SCARCITY

Answer 5

the principle that limited amounts of goods and services are available to meet unlimited wants

Question 6

ECONOMICS

Answer 6

the study of how people seek to satisfy their needs and wants by making choices

Question 7

SHORTAGE

Answer 7

a situation in which consumers want more than producers are willing to make them at a particular price

Question 8

ENTREPENEURS

Answer 8

a person who decides how to combine resources to create goods and services

Question 9

FACTORS OF PRODUCTION

Answer 9

the resources that make goods and services

Question 10

LAND

Answer 10

all natural resources used to produce goods and services

Question 11

LABOR

Answer 11

the effort people devote to tasks for which they are all paid

Question 12

CAPITAL

Answer 12

any human made resource that is used to produce other goods and services

Question 13

CAPITAL (PHYS)

Answer 13

the human made objects used to make other goods and services (MACHINES/EQUIPMENT

Question 14

CAPITAL (HUMAN)

Answer 14

the knowledge and skills a worker gains through education and experience

Question 15

TRADE-OFF

Answer 15

the act of giving up one benefit in order to gain another, greater benefit

Question 16

GUNS AND BUTTER

Answer 16

a phrase expressing the idea that a country that decides to produce more military goods has fewer resources to produce domestic goods and vise versa

Question 17

OPPORTUNITY COST

Answer 17

the most desirable alternative given up as the result of a decision

Question 18

THINKING AT THE MARGIN

Answer 18

the process of deciding whether to do or use one additional unit of some resource

Question 19

COST/BENEFIT ANALYSIS

Answer 19

a decision-making process in which you compare sacrifices and gain by a specific action

Question 20

MARGINAL COST

Answer 20

the extra cost of adding an extra unit

Question 21

MARGINAL BENEFIT

Answer 21

the extra benefit of adding an extra unit

Question 22

PRODUCTION POSSIBILITY CURVE (PPC)

Answer 22

a graph that shows alternative ways to use an economy’s productive resources

Question 23

PRODUCTION POSSIBILITIES FRONTIER (PPF)

Answer 23

a line on a PPC that shows the maximum possible output an economy can produce

Question 24

EFFICIENCY

Answer 24

the use of resources in such a way as to maximize the output of goods and services

Question 25

UNDERUTILIZATION

Answer 25

the use of fewer resources than an economy is capable of usin\

Question 26

LAW OF INCREASING COST

Answer 26

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