Chapter 1: Fundamental Economic Concepts
Terms in this set (35)
the condition that results from society not having enough resources to produce all the things people would like to have.
the study of how people try to satisfy what appears to be seemingly unlimited and competing wants through the careful use of relatively scarce resources.
A basic requirement for survival that includes: food, clothing, and shelter.
A way of expressing a need.
Factors of Production
Resources require to produce things people would like to have; they include: land capital, labor, and entrepreneurs.
Natural resources not created by humans.
The tools, equipment, machinery, and factories used in the production goods and services.
The money used to buy the tools and equipment used in production.
People with all their efforts, abilities, and skills.
A risk-taker in search of profits who does something new with existing resources.
The process of creating goods and services.
Gross Domestic Product (GDP)
The dollar value of all final goods, services, and structures produced within a country's borders in a 12-month period.
A good or service that is useful, relatively scarce, and transferable to others.
An item that is economically useful or satisfies an economic want.
An item intended for final use by individuals.
A manufactured item used to produce other goods and services.
Work that is performed for someone.
A worth that can be expressed in dollars and cents.
Paradox of Value
The situation in which some non-necessities have a much higher value than some necessities.
The capacity to be useful and provide satisfaction.
The accumulation of those economic products that are tangible, scarce, useful, and transferable.
A location or other mechanism that allows buyers and sellers to exchange a certain economic product.
A market where productive resources are bought and sold.
A market where producers sell their goods and services to consumers.
A measure of the amount of output produced by a given amount of inputs in a specific period of time
Division of Labor
Work arranged so that individual workers do fewer tasks than before.
Situation in which a factor of production performs tasks that it can do relatively more efficiently than others.
The sum of the skills, abilities, health, and motivation of people.
Reliance on one another to provide the goods and services that people consume.
The cost of the next best alternative use of money, time or resources when one choice is made rather than another.
Production Possibilites Frontier
A diagram representing various combinations of goods and/or services an economy can produce when all productive resources are fully employed.
A way of thinking about a problem that compares the costs of an action to the benefits received.
Free Enterprise Economy
System in which consumers and privately owned businesses, rather than the government, make the majority of the WHAT, HOW, and FOR WHOM decisions.
Standard of Living
The quality of life based on possessions that make life easier.