Want
A thing that we desire to have
Resource
Anything that is used to produce goods or services (Ex: Woods, tools)
Scarcity
The condition in which our wants are greater than the resources available to satisfy those waters
Opportunity Costs
The most highly valued opportunity or alternative forfeited when a choice is made
Trade-Off
A sitution in which more of one thing means less of something else
Production Possiblities Frontier (PPF)
A graphic representation of all possible combinations of two goods that an economy can produce
Rationing Device
A meansfor deciding who gets what portion of the available resources and goods (ex: price)
Economics
1. The science that studies the choices of people trying to satisfy their wants in a world of scarcity 2. Study of how people use their limited resources to satisfy their unlimited wants
Marginal
Additional
Incentive
Something that encourages or motivates a person to take action
Microeconomics
The branch of economics that deals with human behavior and choices as they relate to relatively small units (ex: an individual, a business firm, or a single market
Macroeconomics
The branches of economics that deals with human behavior and choices as they relate to the entire economy (ex: housing prices nation-wide)
Theory
An explaination of how something works, designed to answer a question for which there is no obvious answer
Tangible
Able to be felt by touch (ex: a computer, a book)
Intangible
Not able to be felt by touch (ex: friendship)
Goods
Anything that satisfies a person's wants or brings satisfaction (can be either tangible or intangible)
Utility
The quality of bringing satisfaction or happiness
Disutility
The quality of bringing dissatisfaction or unhappiness
Renewable Resource
A resource that can be drawn on indefinitely if it is replaced
Nonrenewable Resource
A resource that cannot be replenished (oil and natural gas)
Land
All of the natural resources found in nature (the land, the mineral deposits, water, and the animals)
Labor
The physical and mental talents the people contribute to the production of goods and services
Capital
Produced goods that can be used as resources for future production (ex: factories, machines, farm tractors)
Entrepreneurship
The special talent that some people have for searching out and taking advantage of new business opportunities and for developing new products and new ways of doing things
Services
Tasks that people pay others to perform for them (ex: maids)
Economic Systems
The way in which a society decides what goods to produce, how to produce them, and for whom goods will be produced
Free Enterprise
An economic system in which individuals (not the government) own most, if not all, of the resources and control their use
Socialism
Government controls and may own many of the resources in this economic system (also called a command economy)
Economic Plan
A government program specifying economic activities, such as what goods are produced and what prices will be charged
Income Distribution
The way all the income earned in a country is divided among different groups of income services
Mixed Economies
An economic plan that is neither purely capitalist nor purely socialist; an economy that has elements of both capitialism and socialism
Traditional Economies
An economic system in which the answers to the 3 economic questions are based on customs, traditions, and cultural beliefs (passed down from one generation to the next)
Vision
A sense of how the world works (ways of looking at, understanding, and explaining the world)
Labor Theory of Value
The belief that all the value in goods is derived from the labor
Surplus Value
The difference between the total value of production and the subsistence paid to the workers
Globalization
A phenomenon by which economic agents in any given part of the world are affected by events elsewhere in the world; the growing integration of the national economies of the world to the degree that we may be witnessing the emergence and operation of a sin
Offshoring
Work done for a company by persons other than the original company's employees in a country other than the one in which the company is located
Private Property
Any good that is owned by an individual or a business
Public Property
Any good that is owned by the government
Household
An economic unit of one or more people that sells resources and buys goods and services
Circular Flow of Economic Activity
The economic relationships that exist between different economic groups in an economy
Profit
The amount of money left over after all the costs of production have been paid (exists whenever total revenue is greater than total costs)
Loss
The amount of money by which total cost exceeds total revenue
Ethics
The principles of conduct, such as right and wrong, morality and immortality, good and bad
Entrepreneur
A person who has a special talent for searching out and taking advantage of new business opportunities
Contract
An agreement between 2 or more people to do something
Private Good
A good of which one person's consumption takes away from another person's consumption
Public Good
A good of which one person's consumption does not take away from another person's consumption
Excludable Public Good
A public good that individuals can be excluded from consuming
Nonexcludable Public Good
A public good that individuals cannot be excluded from consuming
Free Rider
A person who receives the benefits of a good without paying for it
Negative Externality
An adverse side effect or an act that is felt by others
Positive Exernality
A benificial side effect of an action that is felt by others