Economic Study Guide
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scarcity
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a situation that exists when there are not enough resources to meet human wants
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TINSTAAFL
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There is no such thing as a free lunch. Someone has to pay for production costs
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factors of production
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Land - society's limited natural resources Capital - the means by which something is produced such as money, tools, equipment, machinery, and factories Labor - the workers who apply their efforts, abilities, and skills to production Entrepreneurs - creating goods and services - result of the land, capital, labor, and entrepreneurs
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market
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any place or situation in which people buy and sell goods and services
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needs
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things such as food, water, clothing, and shelter that are necessary for survival
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financial capital
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money use to buy things
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economics
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the study of how individuals and societies satisfy their unlimited wants with limited resources
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wealth
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the accumulation of goods that are tangible, scarce, useful, and transferable to another person. This does not include services
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wants
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desires that can be satisfied by consuming a good or service
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utility
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a good's or service's capacity to provide satisfaction, which varies with the needs and wants of each person
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opportunity cost
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the value of something that is given up by choosing one alternative over another
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trade-offs
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the alternative someone gives up when making an economic choice
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laissez-faire
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the principle that the government should not interfere in the economy
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entrepreneur
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creating goods and services - result of the land, capital, labor, and entrepreneur
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service
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work that one person does for another for payment
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economic products
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The total market value of all the goods and services produced within the borders of a nation during a specified period.
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free products
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free samples
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consumer goods
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Products that are purchased for consumption by the average consumer
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durable goods
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goods not for immediate consumption and able to be kept for a period of time.
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consumer
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a person who buys goods or services for personal use
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marginal benefit
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the benefit or satisfaction gained from using one more unit of good or service
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incentives
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a benefit offered to encourage people to act in a certain way
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cost-benefit analysis
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act of examining cost and the expected benefit of a choice of decision making
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marginal cost
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the additional cost of producing or using one more unit of a good or service
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producer
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a person who makes goods or provides services
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standard of living
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the degree of wealth and material comfort available to a person or community
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nondurable goods
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products consumers purchase with the plan to use for a short period of time
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consumption
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the using up of a resource.
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specialization
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a situation that occurs when individuals or businesses concentrate their efforts in the areas in which they have an advantage for increased productivity and profit
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value
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worth expressed in dollars and cents. It must have utility
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division of labor
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the assignment of different parts of a manufacturing process or task to different people in order to improve efficiency
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human capital
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the knowledge and skills that enable workers to be productive
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factor market
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the market for the factors of production - land, labor, capital, and entrepreneurship
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capital goods
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Any tangible assets that an organization uses to produce goods or services such as office buildings, equipment and machinery
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GDP
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the market value of all final goods and services produced by a country within a nation in a given time period
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free enterprise
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an economic system in which private business operates in competition and largely free of state control
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economic interdependence
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reliability
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production possibilities frontier
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A curve depicting all maximum output possibilities for two or more goods given a set of inputs (resources, labor, etc.). The PPF assumes that all inputs are used efficiently
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statistics
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numerical data
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microeconomics
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the study of the behavior of individual players in an economy
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macroeconomics
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the study of the behavior of the economy as a whole; concerned with large-scale economic activity
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positive economics
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a way of describing and explaining economics as it is
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normative economics
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a way of describing and explaining what economic behavior ought to be, not what it actually is
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conspicuous consumption
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trying to impress people with something that you own
