need
something necessary for survival, like air, food, and shelter.
want
something desired but not necessary for survival
goods
physical items such as shoes and shirts
services
actions or activities that one person performs for another.
scarcity
limited resources to meet unlimited wants
economics
The study of how people seek to satisfy their needs and wants by making choices, usually because of scarcity.
shortage
when producers won't/can't offer goods or services at the current prices.
land, labor, capital
factors of production
land
All natural resources used to produce goods and services, like fertile land for faming, coal mines, etc.
labor
Paid task devoted to an effort.
capital
Any human-made resource that is used to produce goods or services.
physical capital
capital
human capital
The knowledge and skills workers gain through education and experience.
trade offs
All the alternatives that we give up when we choose something over another.
guns or butter
a country that spends more money on the military can't have as many consumer goods.
opportunity cost
The most desirable alternative given up as the result of a decision.
thinking at the margin
When you decide how much more or less to do.
Production Possibilities Curve
Graph that shows alternative ways to use an economy's productive resources.
Production Possibilities Frontier
shows combinations of two or more products.
efficiency
using resources in such a way as to maximize the production or output of goods and services.
underutilization
using few resources than the economy is capable of using.
cost
alternative we give up when we choose one option over the other.
law of increasing costs
states that as production from one item to another, more and more resources are necessary to increase production of a second item.