wants
desires that can be satisfied by consuming a good or service
needs
things such as food, clothing, and shelter, that are necessary for survival
scarcity
situation that exists when there are not enough resources to meet human wants
economics
the study of how people choose to use scarce resources to satisfy their wants
goods
physical objects that can be purchased, such as food, clothing, and furniture.
services
work that one person performs for another for payment.
consumer
a person who buys goods or services for personal use
producer
a person who makes goods or provides service
factors of production
the economic resources needed to produce goods and services
land
all the natural resources found on or under the ground that are used to produce services or goods
labor
all the human time, effort, and talent that go into the making of productions
capital
all the resources made and used my people to produce and distribute goods and services, includes money and tools
entrepreneurship
is the combination of vision, skill, ingenuity and willingness to take risks that is needed to create and run new businesses
incentives
benefits offered to encourage people to act in certain ways
utility
the benefit or satisfaction gained from the use of a good or service
economize
to "make decisions" according to what you believe is the best combination of costs and benefits
trade-off
the alternative someone gives up when making an economic choice
opportunity cost
the value of something that is given up by choosing one alternative over another
cost-benefit analysis
the practice of examining the cost and the expected benefits of a choice as an aid to decision making
marginal cost
the additional cost of producing or using one more unit of a good or service
marginal benefit
the benefit or satisfaction gained from using one more unit of a good or service
economic model
simplified representations of complex economic activities or concepts
PPC
A graph used to illustrate the impact of scarcity on an economy by showing the maximum number of goods that can be produced using limited resources
efficiency
the condition in which economic resources are being used to produce max output
underutilization
condition in which resources are not being used to full potential
Law of increasing opportunity costs
when production switches from one product to another, increasingly more resources are needed to increase the production of the second product, which causes opportunity costs to rise.
statistics
numerical information or data
microeconomics
the study of behavior of individual players in an economy, such as families, individuals, and businesses
macroeconomics
study of the behavior of the economy as a whole and involves topics such as inflation and unemployment
positive economics
a way of describing and explaining economics as it is. Verifiable by facts.
normative economics
describing and explaining what economic behavior ought to be. Involves value judgements.
Adam Smith
Economist that argued that nations would be wealthier if they allowed free trade. Introduced the concept that the "invisible" guides the marketplace. Buyer and sellers both benefit from free enterprise.
pie graph
a graph that shows how parts make up a whole.
line graph
a graph the is particularly useful to show changes over time
bar graph
a graph that makes it easy to compare numbers.