Econ Chapter 1 Flashcards
Something essential for survival
Need
Something that we desire but that is not necessary for survival
Want
Physical objects that someone produces
Goods
Actions or activities that one person performs for another
Services
The fact that limited amounts of goods and services are available to meet unlimited wants
Scarcity
The study of how people seek to satisfy their needs and wants by making choices
Economics
When consumers want more of a good or service than producers are willing to make available at a particular price
Shortage
A person who decides how to combine resources to create new goods and services
Entrepreneur
The resources used to make all goods and services
Factors of production
All natural resources used to produce goods and services
Land
The effort people devote to tasks for which they are paid
Labor
Any human-made resource that is used to produce other goods and services
Capital
Human-made objects used to create other goods and services
Physical capital
The knowledge and skills a worker gains through education and experience
Human capital
Products needed to make goods and services
Capital goods
The act of giving up one benefit in order to gain another, greater benefit
Trade-off
The most desirable alternative somebody gives up as the result of a decision
Opportunity cost
Deciding how much more (or how much less) to do
Thinking at the margin
A systematic approach to estimating the strengths and weaknesses of alternatives
Cost/benefit analysis
The extra cost of adding one unit
Marginal cost
The extra benefit of adding one unit
Marginal benefit
A graph that shows alternative ways to use an economy’s productive resources
Production possibilities curve
A graph that shows all the different combinations of output of two goods that can be produced using available resources
Production possibilities frontier
The use of resources in such a way as to maximize the output of goods and services
Efficiency
The use of fewer resources than the economy is capable of using
Underutilization
States that as production shifts from making one item to another, more and more resources are necessary to increase production of the second item
Law of increasing costs
Anything that helps to produce goods at a better quality, faster, or cheaper
Technology
What are the four main factors of production?
Land, Labor, Capital, and Entrepreneurs
