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What is Econ Ch 1

Chapter 1 Essential Vocab for Understanding Economics

TermDefinition
Scarcity the conditions that results from society not having enough resources to produce all the things people would like to have.
Economics the study of how people try to satisfy seemingly unlimited and competing needs and wants through the careful use of relatively scarce resources
need a basic requirement from survival, such as food, clothing, and shelter
want simply something we would like to have but is not necessary for survival.
good a useful, tangible item, such as a book, car or MP3 player, that can be used to satisfy a need or want
durable good one that lasts three years of more when used on a regular basis
nondurable good an item that lasts for fewer than three year when used on a regular basis
consumer good it is intended for final use by individuals, such as shoes, a shirt, or an automobile
capital good a tool or good such as machinery or equipment that is used by business to produce other products.
service work that is performed for someone
value a term that refers to a worth that can be expressed in dollars and cents
paradox of value apparent contradiction between the high value of a nonessential item and the low value of an essential item.
utility ability or capacity of a good or service to be useful and give satisfaction to someone
wealth sum of tangible economic goods that are scarce, useful, and transferable from one person to another; excludes services
gross domestic product or GDP monetary value of all final goods, services, and structures produced within a country's borders in a 12 month period.
factors of production productive resources needed to produce goods: the four factors are land, capital, labor and entrepreneurship
land natural resources or "gifts of nature" not created by human effort; one of the four factors of production.
capital tools, equipment, and factories used in the production of goods and services; one of the four factors of production
labor people with all their abilities and efforts; one of the four factors of production; does not include entrepreneur
entrepreneurs risk-taking individuals who introduce new products or services in search of profits; one of the four factors of production
transformed to change the nature of something
production possibilities curve diagram representing all possible combinations of goods and or services an economy can produce when all productive resources are fully employed.
opportunity cost cost of the next best alternative use of money, time or resources, when one choice is made rather than another
trade-offs alternative that must be given up when one choice is made rather than another
consumerism a social movement that was aimed at promoting the interests of consumers
economic growth increase in a nation's total output of goods and services over time.
productivity measure of the amount of output produced in a specific time period with a given amount of resources; normally refers to labor, but can apply to all factors of production
human capital sum of people skills, abilities, health, and motivation
division of labor division of work into a number of separate different workers
specialization assignment of tasks to the workers, factories, regions, or nations that can perform them most efficiently.
economic interdependence mutual dependence of the economic activities of one person, company, region, or nation on those of another person, company, region, or nation.
market meeting place or mechanism through which buyers and sellers of an economic product come together; may be local, regional, national, or global
mechanism process or means by which something can be accomplished
factor markets markets in which productive resources are bought and sold
product markets market in which goods and services are bought and sold
economic model simplified version of a complex concept or behavior expressed in the form of a graph, figure, equation, or diagram
assumptions something taken for granted; something we thing is true
cost-benefit analysis comparison of the cost of an action to its benefits
free enterprise economy market economy in which privately owned businesses have the freedom to operate for a profit with limited government
standard of living quality of life based on ownership of necessities and luxuries that make life easier.