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