Chapter 1 - Economy
Trade-off
Exchanging one thing for another.
Labor
Human effort directed toward producing goods and services.
4 examples of Factors of Production
Land, Labor, Capital, and entrepreneurship.
Factors of Production
Resources needed to produce goods and services.
Fads
Something that becomes popular over night and dies quickly.
Goods
Tangible items that people can buy.
Entrepreneurship
The ability of individuals to start new businesses; risk takers.
Microeconomics
The behavior and decision making by small units such as individuals and firms.
Economy
The production and distribution of goods and services in a society.
Opportunity Cost
The value of the next best alternative that had to be given up to do the action that was chosen.
Production Possibilities Curve
This shows the maximum combinations of goods and services that can be produced form a fixed amount of resources in a given period of time.
Economic Model
A theory or simplified representation that helps explain and predict economic behavior in the real world. Simplified representations of the real world.
Services
Actions that satisfy people's wants or needs.
Productivity
Amount of output that results from a given level of inputs.
Hypothesis
An assumption involving two or more variables that must be tested for validity.
Technology
Any use of land, labor and capital that produces goods and services more efficiently.
Scarcity
Basic economic problem out there that results from a combination of limited resources and unlimited wants.
Capital
Goods used to make other goods and services.