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Econ Unit 1- HB
Vocabulary
| Term | Definition |
|---|---|
| Economics | study of choices a person or society makes to satisfy needs and wants |
| Want | a desire; not needed for survival |
| Need | something required to survive |
| Microeconomics | Study of choices made by a single economic actor such as households, companies, individuals |
| Macroeconomics | Study of behavior and statistics of entire economies; example: interest rates, unemployment rate |
| Resources | all the things that can be used to make goods |
| Scarcity | A situation in which human wants are greater than the capacity of available resources to provide for those wants and when a resource has more than one valuable use |
| Shortage | temporary lack of goods or resources |
| Tradeoff | everything you can no longer do or buy because you chose something else |
| Opportunity Costs | the next best thing that you give up in order to get something |
| Factors of Production | resources needed to produce goods and services: land, labor, capital, entrepreneur |
| Land | FOP natural resources examples: trees, water, coal, oil used to produce goods and services |
| Labor | FOP the work people do to produce goods and services |
| Capital | FOP Manufactured items used to make goods and services examples: building, machinery |
| Human Capital | refers to skills and knowledge in the ability to produce |
| Entrepreneurship | FOP person who starts and runs a business (logging company, sawmill, Home Depot) |
| Technology | the use of land, labor and capital to produce goods and services more efficiently |
| Decision making: | refers to the process by which rational consumers seeking their own happiness or utility will make choices |
| Marginal Costs | increase in total cost when producer increases output by one unit |
| Marginal benefit | additional gain from consuming or producing one more unit of a good or service (measured by $ or satisfaction) |
| Utility | is the usefulness of an item and contributes to the value of the item |
| Cost Benefit Analysis | Used to decide whether an action should be taken based on costs and benefits |
| Problem | controversial assumptions used to put monetary value on things as lives or animal habitats saved, etc |
| Goods | can be touched |
| Consumer good | good (our consumption) |
| Capital goods | are tangible assets such as buildings, machinery, equipment, vehicles and tools that an organization uses to produce goods or services |
| Services | cannot be touched |
| Consumers | People who need goods and services |
| Consumption | Process of using goods and services |
| Production Possibilities Curve | Used to show the combination of two products that is possible with a given amount of resources |
| Economic Systems | Classified by who answers three basic questions (what, how, for whom) |
| Traditional Economy | Decisions on three questions are generally repeat decisions made in earlier times or by previous generations |
| Market Economy: | Individuals and businesses own productive resources and decide the three basic questions, Market prices that result from these decisions act as signals to producers, telling them what buyers want, G&S are allocated on the basis of prices |
| Command Economy | An authority such as a feudal lord, a government agency, or central planners decide three basic questions and to whom goods and resources will be allocated |
| Adam Smith | “Father of Capitalism” |
| Specialization | Specialization is when a nation or individual concentrates its productive efforts on producing a limited variety of goods |
| Voluntary Exchange | is the act of buyers and sellers freely and willingly engaging in market transactions |
| Productivity | Efficient use of resources in production |
| Economic interdependence | decisions made by individual affects decisions made by other people or events in one part of the world or economy affect other parts |
| Free competition | keeps prices low and quality high |
| Regulation | using laws to control businesses |
Created by:
abreland
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