Sexton - Economics- Chapter 1- Concepts and Choices
service
work that one person does for another
incentives
a benefit offered to encourage people to act in a certain way
production possibility curves (PPC)
a graph used to illustrate the impact of scarcity on an economy by showing the maximum number of goods or services that can be produced using limited resources
consumer
a person who buys or uses goods or services
normal economics
a way of describing and explaining what economic behavior ought to be, not what it actually is
land
all of the natural resources needed to produce goods and services
labor
all the human time, effort and talent that go into the making of products
capital
all the resources made and used by people to produce and distribute goods and services
Wants
desires that can be satisfied by consuming a good or a service
Law of Increasing Opportunity Costs
law which 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
producer
maker of goods or a provider of services
statistics
numerical data
goods
objects, such as food, clothing, and furniture, that can be bought
cost-benefit analysis
practice of examining the costs and the expected benefits of a choice as an aid to decision making
economic models
simplified representations of complex economic activities, systems, or problems to clarify trade-offs
marginal cost
the additional cost of producing or using one or more unit of a good or service
trade-off
the alternative someone gives up when making an economic choice
utility
the benefit or satisfaction gained from the use of a good or service
marginal benefit
the benefit or satisfaction gained from using one or more unit of a good or service
entrepreneurship
the combination of vision, skill, ingenuity, and willingness to take risks that is needed to create and run new businesses
underutilization
the condition in which economic resources are not being used to their full potential, resulting in fewer goods and services
efficiency
the condition in which economic resources are used to produce the maximum amount of goods and services
factors of production
the economic resources needed to produce goods and services
Scarcity
the situation that exists when there are not enough resources to meet human wants
economics
the study of how individuals and societies satisfy their unlimited wants with limited resources
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; concerned with large-scale economic activity
opportunity cost
the value of the next-best alternative, or what you give up by choosing one alternative over another
Needs
things, such as food, clothing, and shelter, that are necessary for survival
economize
to make decisions according to what you believe is the best combination of costs and benefits
positive economics
way of describing and explaining economics as it is (p.29)
