| Term | Definition |
|---|
| economics | the study of how we make decisions in a world where resources are limited |
| needs | necessities required for survival |
| wants | things we would like to have that make life more comfortable |
| scarcity | occurs whenever we don't have enough resources to produce all the things we would like to have |
| economic models | are simplified representations of the real world that are used to explain how the economy works |
| trade-off | the alternative you face if you decide to do one thing rather than another |
| oppurtunity cost | the cost of the next best use of your time or money when you choose to do one thing rather than another |
| fixed cost | expenses that are the same no matter how many units of goods are produced |
| variable cost | expenses that change with the number of products produced |
| marginal cost | is the additional cost of producing one extra unit of output |
| marginal benefit | the extra benefit associated with an action |
| cost-benefit analysis | an economic model that compares the marginal costs and marginal benefits of a situation |
| goods | tangible products |
| services | work that is preformed for someone else |
| factors of production | resources necessary to produce good or services; natural resources, labor, capital, and entrepreneurs |
| natural resources | all the "gifts of nature" that make production possible |
| labor | the physical and mental efforts that people contribute to the production of goods or services |
| capital | tools, machinery, and buildings used to make other products |
| entrepreneur | individuals who start new businesses, introduce new products, and improve management techniques |
| Gross Domestic Product | the total value in dollars of the final goods and services produced in a country in a single year |
| standard of living | the quality of life based on the possesion of necessities and luxuries that make life easier |
| factor market | the markets where productive resources are bought and sold, workers earn wages, people who own land may rent it, and those who own capital exchange it for interest |
| product market | the markets where producers offer goods and services for sale, they get money for those and use it to pay for more natural resources, labor, and capital , which are then used to produce more products to be sold in the product market |
| productivity | the measure of the amount of output produced by a given amount of inputs in a specific period of time |
| specialization | takes place when people, businesses, and regions, and even countries concentrate on goods or services that they can produce better than anyone else |
| division of labor | the breaking down of a job into seperate, smaller tasks, which are preformed by different workers |
| human capital | the sum of skills, abilities, and motivation of people |
| economic interdependence | we rely on others and they rely on us |
| capitalism | an economic system in which private citizens own and use the factors of production in order to seek profit |
| free enterprise | competition can flourish without government interference |
| consumer sovereignty | the consumer is the one that decides what goods are produced |
| private property rights | freedom to own, use, or dispose of our own property as we choose as long as we do not interefere with the rights of others |
| competition | the struggle that goes on between buyers and sellers to get the best products at the lowedt prices |
| profit | is the amount of money left over after all the costs of production have been paid |
| profit motive | the driving force that encourages indiciduals and organizations to improve their well-being |
| voluntary exchange | is the act of buyers and sellers freely and willingly exchanging in market transactions |
Combine with other sets
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