Economics Chap 1 Tedt

What are the 3 questions of economics?

1. What to produce? 2. How to produce? 3. For whom to produce?

Specialization

A focus on a particular activity or area of study

Utility

Ability or capacity of a good or service to be useful and give satisfaction to someone.

need

Basic requirement for survival

opportunity cost

Cost of the next best alternative use of money, time, or resources when making choices

3 adam smith contribution

Division of labor, invisible hand and wealth of nation

How are value & utility related

For something to have value it must have utility

Scarcity

Limited quantities of resources to meet unlimited wants

Consumers

People who use goods and services to satisfy their wants and needs.

standard of living

Quality of life based on ownership of necessities and luxuries that make life easier.

land

The "gifts of nature," or natural resources not created by human effort.

Gross Domestic Product (GDP)

The dollar value of all final goods, services, and structures produced within a country's borders in a 12-month period

Economics

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

how are goods,services and consumers related?

They are all used in economics

durable goods

a good that lasts for at least three years

factor market

a market where factors of production are bought and sold

Productivity

a measure of the amount of output produced by a given amount of inputs in a specific period of time

economic model

a simplified version of reality used to analyze real-world economic situations

Tradeoff

alternative that is available when a choice is to be made

4 keys element to the study of economics

analysis, explanation, description and prediction

paradox of value

apparent contradiction between the high value of a nonessential item and the low value of an essential item

Why is scarcity a problem?

because human wants are unlimited while resources are limited

production possibilities frontier

diagram representing maximum combinations of goods or services an economy can produce when all productive resources are fully employed

consumer goods

good intended for final use by consumers rather than businesses

nondurable goods

goods that last for fewer than 3 years

how do the 3 questions in economics help society?

it helps societies make careful choices about they use these resources due to the fact that the world has scarce resources.

The 4 factors of production are:

land, capital, labor, entrepreneurs

free enterprise economy

market economy in which privately owned businesses have the freedom to operate for a profit with limited government intervention

product market

market where goods and services are bought and sold

market

meeting place or mechanism that allows buyers and sellers to come together

value

monetary worth of a good or service as determined by the market

economic interdependence

mutual dependency of one person's, firm's, or region's economic activities on another's

Entrepreneur

people who start new businesses or bring to market

labor

people with all their efforts, abilities, and skills

want

something that people desire but that is not necessary for survival

human capital

sum of people's skills, abilities, health, and motivation

wealth

sum of tangible economic goods that are scarce, useful, and transferable from one person to another

good

tangible economic product that is useful, relatively scarce, transferable to others

division of labor

the type of arrangement in which each worker specializes in a particular task or job

How are tradeoffs and opportunity costs related?

they are related because in order to have an opportunity cost you need tradeoff

what role product market nd factor product play in economics?

they create economic activities that connect individuals and business.

capital or capital goods

tools, equipment, and factories used in the production of goods and services

service

work or labor performed for someone