Question | Answer |
scarcity | not having enough resources to produce all of the things people would like to have |
economics | the study of how people try to satisfy their wants through the use of scarce resources |
Three basic economic questions | What to produce?How to produce?For Whom to produce? |
factors of production | resources required to produce the things we would like to have. (land, capital, labor, and entrepreneurs) |
land | "gifts of nature" or, natural resources not created by man |
capital | the tools, equipment, machinery, and factories used to produce goods and services. |
labor | people with all their efforts, abilities, and skills |
entrepreneur | a risk-taker in search of profits who does something new with existing resources |
production | the process of creating goods and services |
Gross Domestic Product (GDP) | the dollar value of all final goods and services produced within a country's borders in a 12 month period |
a good | an item that is economically useful or satisfies an economic want, such as a book, car, or dvd player |
service | work that is performed for someone |
value | worth that can be expressed in dollars and cents |
utility | the capacity to be useful and provide satisfaction |
market | a location that allows buyers and sellers to exchange a certain economic product |
factor markets | markets where productive resources are bought and sold |
product markets | markets where producers sell their goods and services to consumers |
economic interdependence | we rely on others, and others rely on us, to provide the goods and services that we consume |
trade-offs | alternative choices |
opportunity cost | the cost of the next best alternative use of money, time, or resources when one choice is made over another |
cost-benefit analysis | a way of thinking about a problem that compares the costs of an action to the benefits received |