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Economics Chapter 1 Cards

Terms in this set (24)

Factors of Production
Land- all natural resources used to produce goods and services
Labor- effort a person devotes to a task for which they are paid
Capital- any human-made resource used to create other goods and servics
Entrepreneur
ambitious leader who combines land, labor, and capital to create and market new goods and services
Need
something like food, or shelter that is necessary for survival
Want
an item that we desire but that is not essential to survival
Economics
the study of how people seek to satisfy their needs and wants by making choices
Goods
physical objects such as shoes and shirts
Services
actions or activities that one person performs for another
Scarcity
limited quantities of resources to meet unlimited wants
Shortage
a situation in which a good or service is unavailable
Land
natural resources that are used to make goods and services
Labor
the effortthat people devote to a task for which they are paid
Capital
any human-made resource that is used to create other goods and services
Physical Capital
all human-made goods that are used to produce other goods and services; tools and buildings
Human Capital
the skills and knowledge gained by a worker through education and experience
Trade-Off
an alternative that we sacrifice when we make a decision
Guns or Butter
a phrase that refers to the trade-offs that nations face when choosing whether to produce more 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 do or use one additional unit of some resource
Production Possibilites Curve
a graph that shows alternative ways to use an economy's resources
Production Possibilites Frontier
the line on a production possibilies 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 economy is capable of using
Cost
to an econimist, the alternative that is given up because of a decision
Law of Increasing Costs
law that states that as we shift factors of production from making one good or service to another, the cost of producing the second item increses
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