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FCSDEcon-Ch 1
Economics Vocab PH Ch 1
| Question | Answer |
|---|---|
| need | something that is necessary for survival (air, food, shelter) |
| want | an item that is wanted but not necessary for survival |
| economics | the study of how people seek to satisfy their needs and wants by making choices |
| goods | physical objects sucj as clothes or shoes |
| services | actions or activities that one person performs for another |
| scarcity | limited quantities of resources to meet unlimited wants |
| shortage | a situation in which a good or service is unavailable |
| factors of production | land, labor & capital; the 3 groups of resources that are used to make all goods and services |
| land | natural resources that are used to make goods and services |
| labor | the effort that people devote to a task for which they are paid |
| capital | any human-made resource that is used to create other goods and services |
| physical capital | all human-made goods that are used to produce other goods and services; tools and buildings |
| human capital | the skills and knowledge gained by a worker throught education and experience |
| entrepreneur | ambitious leader who combines land, labor and capital to create and market new goods and services |
| trade-off | an alternative that we sacrifice when we make a decision |
| guns or butter | a phrase that refers to the trade-offs that nations face when choosing whether to produce military or consumer goods |
| opportunity costs | the most desirable given up as a result of a decision |
| thinking at the margin | deciding whether to do or use one additional unit of some resource |
| production possibilities | a graph that shows alternative ways to use an economy's resources |
| production possibilities frontier | the line on a production possibilities graph that shows the maximum possible output |
| efficiency | using resources in such a way as to maximize the production of goods and services |
| underutilization | using fewer resources than an economy is capable of using |
| cost | to an economist, cost is the alternative that is given up because of a decision |
| law of increasing costs | as we shift factors of production from making one good or service to another, the cost of producing the second item increases |
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