needs
essentials for living (food, shelter)
wants
extras people like to have (luxuries, TVs)
Economics is...
the study of how people seek to satisfy needs and wants by making choices
Goods are
physical objects (shoes and shirts)
Services are...
actions or activities one person performs for another
Scarcity
limited quantities of resources to meet unlimited wants
Shortage occurs when...
producers can not or will not offer goods or services at the current prices
Shortages can be...
short term or long term
scarcity is always
long-term
Factors of production
land, labor, and capital; the three groups of resources that are used to make all goods and services
land
natural resources that are used to make goods and services
labor
the effort that people devote to a task for which they are paid
need
something that is necessary for survival
want
an item that we desire but is not essential for survival
economics
the study of how people seek to satisfy their needs and wants by making choices
goods
physical objects
services
actions or activities that one person performs for another
scarcity
limited quantities of resources to meet unlimited wants
shortage
a situation in which a good or service is unavaliable
factors of production
land, labor, and capital; the three groups of resources that are used to make all goods and services
land
natural resources used to make goods and resources
labor
the effort that people devote to a task for which they are paid
capital
any human-made resource that is used to create other goods and services.
physical capital
all human-made goods that are used to produce other goods and services; tools and buildings
human capital
the skills and knowledge gained by a worker through education and experience
entrepreneur
ambitious leader who combines land, labor, and capital to create and market new goods and services
trade-off
an alternative that we sacrifice when we make a decision
guns of butter
a phrase that refers to the trade-offs that nations face when choosing whether to produce more, or less military or consumer goods
opportunity cost
the most desirable alternative given up as the result of a decision
thinking at the margin
deciding whether to do or use on additional unit of some resource
production possibilities curve
graph that shows alternative ways to use an aconomy's resources
production possibilities frontier
lines of a production possibilities graph that shows maximum possible output
efficiency
using resources in asuch a way as to maximize the production of goods and services
underutilization
using fewer resources than an economy is capable of using
cost
to an economist, the alternative that is given up bceause of a decision
law of increasing costs
law that states that as we shift factors of production from one good or service to another ,the cost of producing the second item increases
Natural resources
materials found in nature
land for farming is an example of which F.O.P.?
land
repairing a tv is an example of which F.O.P.?
labor
medical aid from a doctor is an example of which F.O.P.?
labor
Buildings are examples of which F.O.P.?
capital (physical capital)
capital goods is the same thing as...
physical capital
Why is physical capital important?
It saves people and companies money (ex: buildings protect people, tools help you work faster)
How are doctors an example of human capital?
They use their schooling to provide services