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Economics
fundamentals of economics terms
| Term | Definition |
|---|---|
| need | something that is essential for survival, such as food or medical care |
| want | something that we desire but that i not necessary for survival, such as video games or stylish haircuts |
| goods | physical (tangible) objects that someone produces, such as food, clothing, or video games |
| services | actions of activities (intangible) that one person performs for another, such as a hair cut |
| scarcity | the principle that limited amounts of goods and services are available to meet unlimited wants - you cannot have an endless supply |
| shortage | occurs when consumers want more of a good or service than producers are willing to make available at a particular price - - under temporary or long-term circumstances |
| factors of production | the resources used to make all goods or services |
| land | a term that refers to all natural resources used to produce goods and services - materials found in nature, in , or on the land such as oil, iron, coal, water, and forests |
| labor | a terms that refers to the effort people devote to tasks for which they are paid - medical care provider, teacher, technician |
| capital | a term that refers to any human-made resources that is used to produce other goods and services - divided into two types (physical and human) |
| physical captial | human-made objects used to create other goods and services - also referred to as capital goods |
| human capital | the knowledge and skills a worker gains through education and experiences - investing in yourself |
| economics | the study of how people seek to satisfy their needs and wants by making choices |
| guns or butter | a term used to describe one of the common choices facing governments: the choice between spending money on military or domestic needs |
| opportunity cost | the most desirable alternative somebody gives up as a result of a decision |
| production possibilities curve | a graph that shows alternative ways to use an economy's productive resources - points a, b, or and c on guns or butter chart |
| production possibilities frontier | a line that shows combinations of the production of both guns and butter - connects points a, b, and c, on guns or butter chart |
| efficiency | the use of resources in such a way as to maximize the output of goods and services |
| underutilization | the use of fewer resources than the economy is capable of using |
| law of increasing costs | principle that states that as production shifts from making one item to another, more and more resources are necessary to increase production of the second item |
| economic system | the structure of methods and principles a society uses. to produce and distribute goods and services |
| standard of living | level of economic prosperity |
| innovation | the process of bringing new methods, products, or ideas into use |
| traditional economy | relies on habit, custom, or ritual to answer the three basic economic questions |
| market | any arrangement that allows buyers and sellers to exchange things |
| specialization | the concentration of the productive efforts of individuals and businesses on a limited number of activities |
| free market economy | an economic system in which decisions on the three key economic questions are based on voluntary exchange in markets |
| self-interest | somebody's own personal gain |
| competition | the struggle among producers for the dollars of consumers |
| centrally (command) planned economy | an economic system in which the government makes all decisions on the three key economic questions |
| socialism | a range of economic and political systems based on the belief that wealth should be distributed evenly throughout a society |
| communism | a political system in which the government owns and controls all resources and means of production and makes all economic decisions |
Created by:
jaynahiwen
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