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