Economics Flashcards
Want
Something that we desire
Need
Something essential for survival
Goods
Phisical objects that someone produces
Services
Actions or activities that one person performs for another
Entrepreneur: First they recognize a need or want. Then they must assemble the factors of production to meet that need or want.
People who decide how to combine resources to create new goods and services
Scarcity
Limited amounts of goods and services are available to meet unlimited wants.
Economics
The study of how people seek to satisfy there needs and wants by making choices
Shortage
Consumers want more of a good or service then producers are willing to make available at a particular price
Factors of production
The resources used to make all goods and services
The 3 main factors of production are:
land, labor, and capital
Land
All natural resources used to produce goods and services
Labor
Effort people devote to tasks for which they are paid
Capital
Any human made resource that is used to produce other goods and services
Physical capital
Human-made objects used to create other goods and services
Human capital
Knowledge and skills a worker gains through education and experience
Benefits of capital
A key factor of production because people and companies can use it to save a great deal of time and money
Examples of benefits of using capital
Extra time
More knowledge
More productivity
Trade off
Giving up one benefit to gain another
Guns or butter
Spending money on military or domestic needs
Opportunity cost
Gives up as the result of a decision
Thinking at the margin
Deciding how much more or less to do
Cost and benefit analysis
Will sacrifice and will gain
Marginal cost
Extra cost of adding one unit
Marginal benefit
Extra benefit if adding the same unit
