Test 1 Chapter 1 And 2 Flashcards
Scarcity
Demand for a good/service is greater than the availability of the good/service, so scarcity can limit the choices available to the consumers
Good
Product that can be physically acquired or owned
Service
Action performed which cannot be physically acquired
Production
Conversion of resources into goods and services through the production process
Production process
Inputs of resources and factors of production to the production to the output of products and goods and services
Factors of production
- Natural Resources (NR)
- Labor (L)
- Capital (K)
- Productivity (P)
Natural Resources (NR)
- all non-human made resources like
wood, metal, oil, sun, water, flaura, and fauna
Labor (L)
Work necessary to create a product (quantity of work)
Capital (K)
- all human made ressources such as electricity, machinery, buildings, office supplies, factories
-used in the production process
Productivity (Prod.) + modifies the other three
- anything that modifies NR, L, OR K, which can make those units produce more or less than otherwise.
Examples of production
Human capital, technology, entrepreneurship
Human Capital
Education, skills, training, and experience required which allow workers to produce more quantity/quality
Technology
Anything that modifies the ability of capital (K) to produce.
Entrepreneurship
The ability of some labor to take chances when starting new businesses or coming up with fresh ideas for businesses
Income
The reward of engaging in production either by being a producer or by providing resources
