Economics Chapter 1
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27 terms
Terms | Definitions |
|---|---|
 goods | physical objects such as hats, gloves, jackets, cars |
| economics | study of how people make decisions to satisfy their needs and wants -- choices |
| shortage | when consumers want more of a good or service than producers are willing to offer at a particular price, temporary |
| labor | the effort that a person devotes to a task for which the person is paid |
| land | factor of production, all natural resources used to produce goods and services, ie. coal, trees, forests, ferrous materials, oil |
| human capital | knowledge gained from education and experience |
| cost/benefit analysis | analyzing marginal costs and benefits |
| marginal benefit | the added benefit from adding one unit |
| marginal cost | the additional cost of producing one unit |
| opportunity cost | the next best alternative given up when a decision is made |
| thinking at the margin | figuring out what you will gain and lose from an action |
| trade-off | giving up one thing for another |
| efficiency | the use of resources to produce the most goods and services |
| law of increasing costs | the idea that more resources are needed when production shifts to a second good |
| production possibilities curve | a graph that shows different ways an economy's resources can be used |
| production possibilities frontier | the line on a graph that shows production possibilities of any two goods |
| factory shutdown | an example of economic inefficiency |
| underutilization | when an economy produces less than it should with its resources |
| need | something that is necessary to stay alive |
| Factors of Production | resources used to make goods ex. land, labor, capitol |
| Capital | Money or labor used for investments and production. Key factor of production and increases efficiency |
| physical capital | man-made objects used to make goods and services, like buildings or machinery |
| service | work done for other people for a payment |
| guns or butter | idea that a country that makes guns will have fewer resources to make butter |
| entrepreneur | a person who organizes, manages, and takes on the risks of a business |
| Want | something to be desired |
| scarcity | A lack of availability of goods and services. Like shortage, except, it's PERMANENT! |
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