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Basic Economics
Basic Economics Vocabulary Words
| Term | Definition |
|---|---|
| Goods | tangible things (objects) that satisfy economic wants. Shampoo is a consumable product that satisfies people’s wants for a hair cleaning product. Other examples of goods are milk, computers, and cars |
| Services | activities that people perform for others to satisfy economic wants. A haircut is provided by a barber or stylist for others.Other examples of services are plant watering, car washing, and babysitting. |
| Opportunity cost or a foregone alternative | when a person chooses one thing, he or she must give up something else in order to get it |
| Productive resources | used by societies to produce goods and services |
| Capital goods | goods produced and used to make other goods and services |
| Human resources | the people working in a company or organization (e.g., a truck driver, lawyer, postman, etc.). |
| Natural resources | any thing produced by the land (e.g., sand, water, rocks, oil, etc) |
| A trade-off | giving up some of one thing to get more of another thing. |
| Market economy | consumers have the most influence over what is produced. |
| Competitive markets | businesses are forced to produce products consumers demand at the lowest prices that will cover costs. If consumers do not like a particular product that businesses offer for sale, that product will not survive in the market |
| Incentive | a reward or penalty that influences how people behave |
| Human capital | a result from investment in people through education and training. More human capital produces additional knowledge and skills |
| Wage or salary income | earned in return for providing labor resources (working) |
| Entrepreneurs | individuals who are willing to take risks in order to develop new products and start new businesses |
| Profit | the amount of revenue left over after all costs of production are considered. Profit is the payment to entrepreneurs for taking the risk to start a business, or to continue in the business |
| Barter | the exchange (goods or services) for other goods or services without using money. |
| Voluntary exchange | occurs when each person is able to trade one item for another item that he or she values more than the first item. No one expects to be worse off due to the exchange; otherwise the trade would not take place |
| Exports | domestic goods and services sold to buyers in other countries |
| Imports | goods or services bought in one country that was produced in another |
| Specialization | each worker does what he or she does best, which enables people to generate higher incomes (and produce more) than would be the case if they did not specialize |
| Specialization | allows more goods and services to be produced because it results in higher output per worker |
| Specialization | requires more cooperation or interdependence among workers. If one person is slower at his or her task than the others are at their tasks, then production may be reduced |
| Specialization | leads to more trading among workers (and among nations) |
| Productivity of workers | output per worker |
| output per worker | when workers use capital goods (e.g., machines, computers and other equipment) they can improve their ability to produce goods and services in a given amount of time |
| law of demand | as the price of a good or service increases, the quantity demanded of that good or service will decrease |
| Inflation | the Increase in the general level of prices of goods and services. It can result from increases in the money supply, increases in demand for goods and services, or from increases in the costs of producing goods and services |
| monopoly | when there is only one seller of a product in a given market |
| purchasing power | how much you can buy with the dollar, which depends on its value |
Created by:
yer.yang
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