| Term | Definition |
|---|
| need | something necessary for survival; air, water, food |
| want | an item that we desire but is not necessary for survival |
| economics | study of how people seek to satisfy their needs and wants by making choices |
| goods | physical objects such as clothes or shoes |
| services | actions or activities that one 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, and capital; the three groups of resources that are used to make goods and services |
| land | natural resources used to make goods and services |
| labor | 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 resources |
| physical capital | all human-made goods that are used to produce other goods and services |
| human capital | skills and knowledge gained by a worker through education and experience |
| entreperneur | ambitious leader who combines land, labor, and capital to create and market new goods and services |
| trade-off | alternative that we sacrifice when we make a decision |
| guns or butter | phrase that refers to the trade-offs that nations face when choosing whether to produce moer or less military or consumer goods |
| opportunity cost | the most desirable alternative given up as the result of a decision |
| thinking at the margin | deciding whether to use one additional unit of some resource |
| production possibilities curve | graph that shows alternative ways to use an economy's resources |
| production possibilities frontier | 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 an economy is capable of using |
Combine with other sets
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