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Ch. 1 terms
terms for chapter 1: what's economics?
Term | Definition |
---|---|
need | something essential for survival |
want | something that people desire but that is not necessary for survival |
goods | physical objects that someone produces |
services | actions or activities that one person performs for another |
scarcity | principle that limited amounts of goods and services are available to meet unlimited wants |
economics | study of how people seek to satisfy their needs and wants by making choices |
shortage | situation in which consumers want more of a good or service than producers are willing to make available at particular prices |
entrepreneur | person who decides how to combine resources to create goods and services |
factors of production | resources that are used to make goods and services |
land | all natural resources used to produce goods and services |
labor | the 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 |
trade-off | alternatives that we give up when we choose one course of action over another |
"guns or butter" | phrase expressing the idea that a country that decides to produce more military goods ("guns") has fewer resources to produce consumer goods ("butter") and vice versa |
opportunity cost | most desirable alternative given up as result of a decision |
thinking at the margin | process of deciding how much more or less to do |
cost/benefit analysis | decision-making process in which you compare what you will sacrifice and gain by a specific action |
production possibilities curve | graph that shows alternative ways to use an economy's productive resources |
efficiency | use of resources in such a way as to maximize the output of goods and services |
underutilization | use of fewer resources than an economy is capable of using |
law of increasing costs | economic principle which states that as production shifts from making one good or service to another, more and more resources needed to increase production of second good or service |