Chapter 1 Essential Vocab for Understanding Economics
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| Scarcity | the conditions that results from society not having enough resources to produce all the things people would like to have.
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| Economics | the study of how people try to satisfy seemingly unlimited and competing needs and wants through the careful use of relatively scarce resources
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| need | a basic requirement from survival, such as food, clothing, and shelter
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| want | simply something we would like to have but is not necessary for survival.
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| good | a useful, tangible item, such as a book, car or MP3 player, that can be used to satisfy a need or want
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| durable good | one that lasts three years of more when used on a regular basis
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| nondurable good | an item that lasts for fewer than three year when used on a regular basis
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| consumer good | it is intended for final use by individuals, such as shoes, a shirt, or an automobile
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| capital good | a tool or good such as machinery or equipment that is used by business to produce other products.
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| service | work that is performed for someone
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| value | a term that refers to a worth that can be expressed in dollars and cents
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| paradox of value | apparent contradiction between the high value of a nonessential item and the low value of an essential item.
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| utility | ability or capacity of a good or service to be useful and give satisfaction to someone
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| wealth | sum of tangible economic goods that are scarce, useful, and transferable from one person to another; excludes services
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| gross domestic product or GDP | monetary value of all final goods, services, and structures produced within a country's borders in a 12 month period.
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| factors of production | productive resources needed to produce goods: the four factors are land, capital, labor and entrepreneurship
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| land | natural resources or "gifts of nature" not created by human effort; one of the four factors of production.
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| capital | tools, equipment, and factories used in the production of goods and services; one of the four factors of production
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| labor | people with all their abilities and efforts; one of the four factors of production; does not include entrepreneur
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| entrepreneurs | risk-taking individuals who introduce new products or services in search of profits; one of the four factors of production
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| transformed | to change the nature of something
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| production possibilities curve | diagram representing all possible combinations of goods and or services an economy can produce when all productive resources are fully employed.
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| opportunity cost | cost of the next best alternative use of money, time or resources, when one choice is made rather than another
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| trade-offs | alternative that must be given up when one choice is made rather than another
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| consumerism | a social movement that was aimed at promoting the interests of consumers
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| economic growth | increase in a nation's total output of goods and services over time.
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| productivity | measure of the amount of output produced in a specific time period with a given amount of resources; normally refers to labor, but can apply to all factors of production
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| human capital | sum of people skills, abilities, health, and motivation
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| division of labor | division of work into a number of separate different workers
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| specialization | assignment of tasks to the workers, factories, regions, or nations that can perform them most efficiently.
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| economic interdependence | mutual dependence of the economic activities of one person, company, region, or nation on those of another person, company, region, or nation.
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| market | meeting place or mechanism through which buyers and sellers of an economic product come together; may be local, regional, national, or global
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| mechanism | process or means by which something can be accomplished
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| factor markets | markets in which productive resources are bought and sold
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| product markets | market in which goods and services are bought and sold
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| economic model | simplified version of a complex concept or behavior expressed in the form of a graph, figure, equation, or diagram
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| assumptions | something taken for granted; something we thing is true
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| cost-benefit analysis | comparison of the cost of an action to its benefits
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| free enterprise economy | market economy in which privately owned businesses have the freedom to operate for a profit with limited government
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| standard of living | quality of life based on ownership of necessities and luxuries that make life easier.
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