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Economics 01
Economics lesson 1 to 2
| Term | Definition |
|---|---|
| economics | the study of how individuals and societies make decisions about ways to use scarce resources to fulfill wants and needs |
| macroeconomics | -the big picuture: growth, employment, etc. -choices made by large groups (like countries) |
| microeconomics | -how do individuals make economic decisions |
| the five economic questions | society (we) must figure out -WHAT to produce (make) -HOW MUCH to produce (quantity) -HOW to produce it (manufacture) -FOR WHOM to produce (who gets what) -WHO gets to make these decisions |
| resources | the things used to make other goods |
| scarcity | unlimited wants and needs but limited resources |
| why choices | we make choices about how we spend our money, time, and energy so we can fulfill our needs and wants. |
| needs | "stuff" we must have to survive, generally: food, shelter, clothing |
| wants | "stuff" we would really like to have (fancy food, shelter, clothing, big screen TVs, jewelry, conveniences... also known as luxuries... |
| trade-offs | you can't have it all (scarcity-remember?) so you have to choose how to spend your money, time, and energy. these decisions involve picking one thing over all the other possibilities-a trade-off! |
| opportunity cost | -the valueof the next best choice (ex: sleeping is the opportunity cost of studying for a test) -this is really important , when you choose to do one thing, its value (how much is it worth) is measured by the value of the next best choice. |
| production | production is how much stuff an individual, business, country, even the world makes |
| stuff | goods and services |
| goods | tangible (you can touch it) products we can buy |
| services | work that is performed for others |
| 4 factors of production | land, labor, capital, entrepreneurship |
| land | natural resources-water, natural gas, oil, trees (all the stuff we find on, in and under the land) |
| labor | physical and intellectual- labor is manpower |
| capital | tools machinery, factories-the things we use to make things - human capital is brainpower, ideas, innovation |
| entrepreneurship | investment- invest time, natural resources, labor and capital are all risks associated with production |
| 3 parts to the production process | factors of production, producer, consumer |
| factors of production | what we need to make goods and services |
| producer | company that makes goods and/or delivers services |
| consumer | people who buy goods and services (formerly known as "stuff") |
| capital goods | are used to make other goods |
| consumer goods | final products that are purchased directly by the consumer |
| specialization | dividing up production so that goods are produced efficiently |
Created by:
Andromeda Annabeth Chase
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