Wants
goods and services that people would like to obtain
Needs
items that people must have to live; food, water, shelter, basic clothing
Scarcity
condition that exists because human wants and needs are greater than available resources
Incentives
positive and negative rewards that encourage economic behavior such as making purchases or working to increase productivity
Resources
items available to produce goods and services to satisfy human wants and needs
Opportunity Costs
the item or value that is lost when someone makes an economic decision; the next best alternative; the item that is not chosen
Trade Offs
action of giving up one item or category for another; example, "guns vs butter
Factors of Production (Productive Resources)
land, labor, capital, and entrepreneurship
Land
the earth and all of the resources coming from the land
Labor
efforts and abilities of humans used to produce goods and services, mental and physical
Capital
tools, equipment, and facilities involved in creating goods and services and getting them to the consumers
Financial capital
money from savings and investments that finance businesses
Entrepreneur
person or individual who organizes the resources for production and distribution, entrepreneurs take risks
Allocation
the way society deals with scarcity; prices, government regulation, rationing
Decision Making
choosing between two or more economic options
Marginal benefits and costs
what consumers and producers evaluate in making economic decisions; benefits should be greater than costs
Marginal utility
the satisfaction and usefulness of adding one unit in production or one more item in consumption
Consumer
those who obtain and use goods and services produced by others
Product (Producer, Production)
an economic good that can be used to satisfy needs and wants
Service
work performed to satisfy needs and wants, example, haircut
Specialization
individuals do specific tasks in the production of goods and services, ex. heart specialist
Voluntary Exchange
consumers and producers decide which goods and services to exchange and set the prices
Absolute Advantage
one person or country can produce more than another in a specific time period; measured in terms of inputs and outputs
Comparative Advantage
one person or country has a lower opportunity cost in the production of one good or service over another good or service