need
something essential for survival
want
something that people desire but that is not necessary for survival
goods
the physical objects that someone produces
services
the actions or activities that one person performs for another
scarcity
the principle that limited amounts of goods and services are available to meet unlimited wants
economics
the study of how people seek to satisfy their needs and wants by making choices
shortage
a situation in which consumers want more of a good or service than producers are willing to make available at a particular price
entrepreneur
a person who decides how to combine resources to create goods and services
factors of production
the resources that are used to make goods and services
land
all natural resources used to produce goods and services
labor
the effort people devote to tasks for which they are paid
capital
any human-made resource that is used to produce other goods and services
physical capital
the human-made objects used to create other goods and services
human capital
the knowledge and skills a worker gains through education and experience
trade-off
the act of giving up one benefit in order to gain another, greater benefit
guns or butter
a phrase expressing the idea that a country that decides to produce more military goods has fewer resources to produce consumer goods and vice versa
opportunity cost
the most desirable alternative given up as the result of a decision
thinking at the margin
the process of deciding whether to do or use one additional unit of some resource
cost/benefit analysis
a decision making process in which you compare what you will sacrifice and gain by a specific action
marginal cost
the extra cost of producing one unit
marginal benefit
the extra benefit of adding one unit
production possibilities curve
a graph that shows alternative ways to use the economy's productive resources
production possibilities frontier
a line on a production possibilities curve that shows the maximum possible output an economy can produce
efficiency
the use of resources in such a way as to maximize the output of goods and services
underutilization
the use of fewer resources than an economy is capable of using
law of increasing costs
an economic principle which states that as production shifts from making one good or service to another, more and more resources are needed to increase production of the second good or service