wants
desires that can be satisfied by consuming a good or a service
needs
things that are necessary for survival
scarcity
exists when there are not enough resources to satisfy human wants
goods
objects, such as food, clothing, and furniture, that can be bought
services
work that one person does for another
factors of production
the resources needed to produce goods and services
land
refers to all natural resources used to produce goods and services
labor
all of the human effort used to produce goods and services
capital
all of the resources made and used by people to produce goods and services
incentives
methods used to encourage people to take certain actions
utility
the benefit or satisfaction received from using a good or service
opportunity cost
the value of something that is given up to get something else that is wanted
marginal cost
the additional cost of using one more unit of a product
marginal benefit
the additional satisfaction from using one more unit of a product
production possibilities curve (PPC)
a graph used by economists to show the impact of scarcity on an economy
efficiency
Involves producing the maximum amount of goods and services possible
underutilization
producing fewer goods and services than possible
trade-off
the alternative people give up when they make choices
economics
the study of how people choose to use scarce resources to satisfy their want
consumer
a person who buys goods or services for personal use
producer
a person who makes goods or provides services
entrepreneurship
the combination of vision, skill, ingenuity, and willingness to take risks that is needed to create and run new businesses
economize
to make decisions according to what you believe is the best combination of costs and benefits
cost-benefit analysis
practice of examining the costs and the expected benefits of a choice as an aid to decision making
economic model
a simplified representation of complex economic activities, systems, or problems to clarify trade-offs
law of increasing opportunity costs
states that as production switches from one product to another, increasingly more resources are needed to increase the production of the second product, which causes opportunity costs to rise
statistics
numerical data or information
microeconomics
the study of the behavior of individual players in an economy, such as individuals, families, and businesses
macroeconomics
the study of the behavior of the economy as a whole and involves topics such as inflation, unemployment, aggregate demand, and aggregate supply
positive economics
a way of describing and explaining economics as it is, not as it should be
normative economics
a way of describing and explaining what economic behavior ought to be, not what it actually is