economics test chapter 1 study guide

value
monetary worth of a good or service determined by market

economics
the study of how individuals and nations make choices about ways to use scarce resources to fulfill their needs and wants

capital
tools,equipment,and factories used in production of goods and services

scarcity
economic problem of meeting people’s wants with scarce resources

opportunity cost
cost of the next best alternative use of money, time, or resources when one choice is made rather than another

wealth
the accumulation of products that are tangible, scarce, useful, and transferable from one person to another

labor
people with all their efforts, abilities, and skills.

trade offs
alternative choices

standard of living
quality of life based on ownership of necessities and luxuries that make life easier

good
a useful tangible item that satisfies a want

importance of economics
to understand how and why the world changes, and appreciate how we affect the world and vise versa

paradox of value
needs are cheap and wants are expensive