people cannot have everything
they need and want
Economics
the study of how people seek to satisfy their needs and wants by making choices
Scarcity
implies limited quanties of resources to meet unlimited wants
Economics is about
solving the problem of scarcity
Scarcity is not the same
as shortage
A shortage occurs when prodcuers will not or cannot offer goods or services at
the curent prices
Shortages can be
temorary or long term
Scarcity in contrast to shortages
always exists because our needs ans wants are always greater than our resource supply
Goods and services are scarce becasue
they are made from resources that are scarce
Economists call the resources that are used to make all goods and services the
factor of production, or factor resources
The term land
refers to all natural resources to produce goods and services
Labor is the effort that
a person devotes to a task for which that person is paid
Capital
is any human made resource that is used to produce other goods and services
The categories of capitol are
human, phyical and finacial
Physical Capitol
includes building and tools, it saves ppl and compaines a great deal of time and money. objects used to make things
Benefits of pyschial capital
Extra time, more knowledge, and more productivity
Human capitol
The knowledge and skills a worker gains through education and experience
Entrepenurs
are ambituous leaders who decide how to combine lnd, labor, and capital resources to create new goods and services
Production of evverything or anything is
always scarce
When we decide on one alternative
we gain one thing but lose something else
Trade offs
are all the alternatives that we give up whenever we choose one course of action over another
The most desirable alternative given up as the result of a decision is called
Opportunity cost
With each new situation the benfits and opportunity costs
change
Thinking at margin is that from an economists point o view
you decide how MUCH more or less to do something
A production curve shows
alternative ways to us an econmoys productive resources
Production possibilites frontier
the line on the graph that shows combinations of productions of two things
Production possibility graphs tell us
How effiecent an ecomony is and whether an economy has grown or shrunk and the opportunity cost of a decision to produce more of one good or service
Efficiency
Means using resources in such a way as to maximize the production or output of goods and services
Underutilization
Using fewer resources than the economy is capable of usiing
A production possibilities curve reflects the countrys current production possibilites as if
the countrys resources were frozen in time. Biut in the real world a countrys resources are constantly changing
When economys grow the production possibilites curve shifts to the
right
when a econmoy declines the possibilites curve shifts to the
left
Cost
the alternative that we give up when we choose one option over another, opportunity cost
law of increasing costs
increasingly expensive trade offs are explained. the law states that as production switches from one item to another more and more resources are needed to increase production soo the opportunity cost increases
The law of increasing costs expains
why production possibilites frontiers usually curve
Both human and physical catial reflects a vital ingrident
technology
A countries production possibilites depend on both
technology level and the resources they have
Thinking on margin has a
numberic value