Economics Terms
Scarcity
A situation in which unlimited wants exceed the limited resources available to fulfill those wants
Utility
Ability or capacity of a good or service to be useful and give satisfaction to someone.
service
Any activity that fulfills a human want or need and returns money to those who provide it.
need
Basic requirement for survival
opportunity cost
Cost of the next best alternative use of money, time, or resources when one choice is made rather than another
How is economic growth measured?
Gross Domestic Product (GDP)
land
all natural resources used to produce goods and services
Trade-off
an alternative that we sacrifice when we make a decision
want
an item that we desire but that is not essential to survival
Explain why economic education is important
it helps people become better decision makers
economic growth
the ability of the economy to increase the production of goods and services
labor
the effort that people devote to a task for which they are paid
How do goods and services differ?
*Goods are tangible products, and services are work or labor performed for someone.
How does economic growth occur?
1. acquiring more resources 2. finding ways to make better use of resources we have
Specialization
A focus on a particular activity or area of study
Entrepreneur
A person who starts up and takes on the risk of a business
Why is economics considered a social science?
It deals with and studies the behavior of people and societies as they deal with the problem of scarcity.
factors of production
Land, labor, and capital; the three groups of resources that are used to make all goods and services
standard of living
Quality of life based on ownership of necessities and luxuries that make life easier.
production
The process of creating goods and services
Economics
The study of how people seek to satisfy their needs and wants by making choices
Gross Domestic Product (GDP)
The sum total of the value of all the goods and services produced in a nation
wealth
The total value of money and other assets, minus outstanding debts
Productivity
The value of a particular product compared to the amount of labor needed to make it.
Three basic economic questions
What to produce? How to produce? For whom to produce?
market
a group of buyers and sellers of a particular good or service
good
a physical item that is produced and can be weighed or measured
economic interdependence
a reliance on others, as they rely on you, to provide goods and services to be consumed
economic model
a theory or simplified representation that helps explain and predict economic behavior in the real world
consumer goods
goods produced for present consumption
capital goods
goods that are used in producing other goods, rather than being bought by consumers.
durable goods
manufactured items that have a life span longer than three years
free enterprise economy
market economy in which privately owned businesses have the freedom to operate for a profit with limited government intervention
capital
money for investment
human capital
the skills and knowledge gained by a worker through education and experience
division of labor
the type of arrangement in which each worker specializes in a particular task or job
nondurable goods
those goods that last a short period of time, such as food, light bulbs, and sneakers
Inferring
when you explain or interpret the things you observe
