Prentice Hall. Economics. Principles in Action.Chapter 1. What is Economics? – Flashcards
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need
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something like air, food, or shelter that is necessary for survival
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want
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an item that we desire but that is not essential to survival
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economics
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the study of how people seek to satisfy their needs and wants by making choices
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goods
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physical objects such as clothes or shoes
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services
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actions or activities that one person performs for another
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scarcity
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limited quantities of resources to meet unlimited wants
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shortage
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a situation in which a good or service is unavailable
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factors of production
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land, labor, and capital; the three groups of resources that are used to make all goods and services
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land
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natural resources that are used to make goods and services
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labor
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the effort that people devote to a task for which they are paid
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capital
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any human-made resource that is used to create other goods and services
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physical capital
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all human-made goods that are used to produce other goods and services; tools and buildings
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human capital
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the skills and knowledge gained by a worker through education and experience
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entrepreneur
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ambitious leader who combines land, labor and capital to create and market new goods and services
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trade-off
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an alternative that we sacrifice when we make a decision
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guns or butter
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a phrase that refers to the trade-offs that nations face when choosing whether to produce more or less military or consumer goods
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opportunity cost
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the most desirable alternative given up as the result of a decision
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thinking at the margin
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deciding whether to do or use one additional unit of some resource
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production possibilities curve
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a graph that shows alternative ways to use an economy's resources
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production possibilities frontier
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the line on a production possibilities graph that shows the maximum possible output
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efficiency
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using resources in such a way as to maximize the production of goods and services
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underutilization
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using fewer resources than an economy is capable of using
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cost
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to an economist, the alternative that is given up because of a decision
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law of increasing costs
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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 increases
