| Term | Definition |
|---|
| economics | the study of how we make decisions in a world where resources are limited (a.k.a. the science of decision-making) |
| needs | things required for survival ex. food, clothing, shelter |
| wants | things we would like to have |
| scarcity | not having enough resources to produce all of the things w would like to have |
| for whom, what, and how to produce | alternative choices we make because of scarcity |
| economic models | simplified representation of the real world that are used to explain how the economy works |
| trade-off | exchanging of one thing for the use of another |
| opportunity cost | the cost of the next best use of time and money when choosing to one thing or another |
| fixed costs | expenses that are the same no matter how many units of a good are produced |
| variable costs | expenses that change with the number of products produced |
| total costs | fixed costs + variable cost |
| marginal cost | the additional cost of producing one additional unit of product |
| total revenue | equals the number of units sold times the average price per unit |
| marginal revenue | the change in total revenue that results from selling one more unit of output |
| marginal benefit | the additional or extra benefit associated with an action |
| cost-benefit analysis | economic model that compares the marginal costs and marginal benefits of a decision |
| goods | tangible products |
| services | work performed for someone else |
| natural resources, labor, capital, and entrepreneur | four factors of production |
| natural resources | all the gifts of nature that make production possible ex. land, rain, forests and animals |
| labor | nation's workforce of human resources |
| capital | tools, machinery, and buildings used to make other products |
| entrepreneurs | individuals who start new businesses, introduce new products, and improve management techniques |
| GDP | gross domestic product |
| GDP | a measure of the size of the economy (the total value, in dollars, of all FINAL goods and services produced in the country during a single year |
| $13.13 trillion | GDP of the United States in 2006 |
| standard of living | the quality of life based on the possession of necessities and luxuries that make life easier |
| market | a location of situation that allows buyers to exchange a certain product |
| local, regional, national, global | four markets |
| factor markets | the markets where productive resources are bought and sold |
| consumer | sector in which workers earn wages in exchange for their labor |
| product markets | markets where producers offer goods and services for sale |
| business | sector in which businesses receive payment for their products from consumers and then buy capital goods in order to produce more products |
| government | sector in which government buys productive inputs in the factor markets to use in creating its goods and services |
| foreign | sector that includes all of the countries of the world |
| productivity | a measure of the amount of output produced by a given amount of inputs in a specific amount of time |
| specialization | people, businesses, groups, and countries focus on goods or services that they can produce better than anyone else |
| division of labor | the breaking down of jobs into seperate, smaller tasks which are performed by different workers ex. assembly line |
| human capital | the sum of the skills, abilities, and motivation of the people |
| economic interdependence | we rely on others, and others rely on us, to provide the goods and services that we consume |
| capitalism | an economic system in which private citizens own and use the factors of production to seek a product |
| free enterprise | an economy in which competition is allowed to flourish with a minimum of government interference |
| popular sovereignty | the consumer acts as the ruler of the market and determines what products will be produced |
| laissez faire | let it be (let the government run itself) |
| Dr. Simon Kuznets | developed the GDP in the 1930's |
| Adam Smith | wrote The Wealth of Nations |
Combine with other sets
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