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Chapter 1 terms and things to know - Economics
Terms in this set (24)
is something like air, food, or shelter that is necessary for survival.
is an item that we desire but that is not essential to survival.
is the study of how people seek to satisfy their needs and wants by making choices.
are physical objects such as shoes and shirts.
are actions or activities that one person performs for another.
implies limited quantities of resources to meet unlimited wants.
occurs when producers will not or cannot offer goods or services at the current prices.
Factors of production
Land, Labor, and Capital
to refer to all natural resources used to produce goods and services.
is the effort that a person devotes to a task for which that person is paid.
is any human made resource that is used to produce other goods and services.
Human made objects used to create other goods and services.
is knowledge and skills a worker gains through education and experience.
are ambitious leaders who decide how to combine land, labor, and capital resources to create new goods and services.
are all the alternatives that we give up whenever we choose one course of action over another.
guns or butter
country has too choose too produce more military goods or consumer goods.
The most desirable alternative given up as the result of a decision.
thinking at the margin
When you think about how much more or less too do.
production possibility curve
(graph) Shows alternative ways to use an economy's productive resources.
production possibilities frontier
a line drawn on a graph that shows the possible combinations of productions that can be made.
Using resources in such a way as to maximize the production or output of goods and services.
Using fewer resources than the economy is capable of using
is the alternative we give up when we choose one option over the other.
law of increasing costs
States that as production switches from one item to another (for example, from shoes to watermelons), more and more resources are necessary to increase production of the second item (Watermelon). Therefore, the opportunity cost increases.
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