Economics Chapter 1 Cards

Trade-Off

an alternative that we sacrifice when we make a decision

Underutilization

using fewer resources than an economy is capable of using

Efficiency

using resources in such a way as to maximize the production of goods and services

Factors of Production

Land- all natural resources used to produce goods and services Labor- effort a person devotes to a task for which they are paid Capital- any human-made resource used to create other goods and servics

Production Possibilites Curve

a graph that shows alternative ways to use an economy's resources

Guns or Butter

a phrase that refers to the trade-offs that nations face when choosing whether to produce more or less military or consumer goods

Shortage

a situation in which a good or service is unavailable

Services

actions or activities that one person performs for another

Physical Capital

all human-made goods that are used to produce other goods and services; tools and buildings

Entrepreneur

ambitious leader who combines land, labor, and capital to create and market new goods and services

Thinking at the Margin

deciding whether to do or use one additional unit of some resource

Law of Increasing Costs

law that states that as we shift factors of production from making one good or service to another, the cost of producing the second item increses

Scarcity

limited quantities of resources to meet unlimited wants

Land

natural resources that are used to make goods and services

Goods

physical objects such as shoes and shirts

Need

something like food, or shelter that is necessary for survival

Production Possibilites Frontier

the line on a production possibilies graph that shows the maximum possible output

Opportunity Cost

the most desirable alternative given up as the result of a decision

Human Capital

the skills and knowledge gained by a worker through education and experience

Economics

the study of how people seek to satisfy their needs and wants by making choices

Cost

to an econimist, the alternative that is given up because of a decision

Want

an item that we desire but that is not essential to survival

Capital

any human-made resource that is used to create other goods and services

Labor

the effortthat people devote to a task for which they are paid