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Econ Chapter 1 Vocab
What is Economics?
| Term | Definition |
|---|---|
| Scarcity | fundamental economic problem facing all society that results from a combination of limited resources and people’s virtually unlimited wants |
| Economics | social science dealing with the study of how ppl satisfy seemingly unlimited and competing wants with the careful use of scarce resources |
| Need | basic requirement for survival; includes food, clothing, and/or shelter |
| Want | something we would like to have but that is not necessary for survival |
| Factors of Production | productive resources that make up the four categories of land, capital, labor, and entrepreneurship |
| Land | natural resources or “gifts of nature” not created by human effort; one of four factors of production |
| Capital | tools, equipment, and factories used in the production of goods and services; one of four factors of production |
| Capital Good | tool, equipment, or other manufactured good used to produce other goods and services; a factor of production |
| Labor | people with all their abilities and efforts; one of four factors of production, does not include the entrepreneur |
| Entrepreneur | risk-taking individual in search of profits; one of four factors of production |
| Gross Domestic Product (GDP) | dollar value of all final goods, services, and structures produced within a country’s national borders during a one-year period |
| Good | tangible economic product that is useful, relatively scarce, and transferable to others |
| Consumer Good | good intended for final use by consumers rather than businesses |
| Durable Good | a good that lasts for at least three years when used regularly |
| Nondurable Good | a good that wears out or lasts for fewer than three years when used regularly |
| Service | work or labor performed for someone |
| Paradox of Value | apparent contradiction between the thigh monetary 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 |
| Market | meeting place or mechanism that allows buyers and sellers to come together |
| Factor Market | market where the factors of production are bought and sold |
| Product Market | market where goods and services are bought and sold |
| Economic Growth | increase in a nation's total output of goods and services over time |
| Productivity | measure of the amount of output produced with a given amount of productive factors |
| Human Capital | sum of ppls skills, abilities, health, knowledge, and motivation |
| Division of Labor | division of work into a number of separate tasks to be performed by diff workers |
| Specialization | assignment of tasks to the workers, factories, regions, or nations that can perform them more efficiently |
| Economic Interdependence | mutual dependency of one person’s, firm’s, or region’s economic activities on another’s |
| Trade-Off | alternative that is available whenever a choice is to be made |
| Opportunity Cost | cost of the next-best alternative use of money, time, or resources when making a choice |
| Production Possibilities Frontier | diagram representing the maximum combinations of goods and/or services an economy can produce when all productive resources are fully employed |
| Economic Model | simplified version of a complex concept or behavior expressed in the form of an equation, graph, or illustration |
| Cost-Benefit Analysis | way of thinking about a choice that compares 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 invention |
| Standard of Living | quality of life based on ownership of necessities and luxuries that make life easier |
Created by:
Damma15724
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