Economics: Unit 1

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need

something like air, food, or shelter that is necessary for survival

invisible hand

term economist use to describe the self-regulating nature of the marketplace

legal equality

the concept of giving everyone the same legal rights

private property rights

the concept that people have the right and privilege to control their possessions as they wish

free contract

the concept that people may decide what agreements they want to enter into

voluntary exchange

the concept that people may decide what and when they want to buy and sell

public interest

the concerns of the public as a whole

labor

the effort that people devote to a task for which they are paid

profit

the finacial gain made in a transaction

factor payments

the income people receive for supplying factors of production -land, labor, capital, or entrepreneurship

production possibilities frontier

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

product market

the market in which households purchase the goods and services that firms produce

economic system

the method used by a society to produce and distribute goods and services

opportunity cost

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

private sector

the part of the economy that involves the transactions of individuals and businesses

technology

the process used to produce a good or service

competition

the rivalry among sellers to attract customers while lowering costs

human capital

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

competition

the struggle among producers for the dollars of consumers

economics

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

macroeconomics

the study of the behavior and decision making of entire economics

microeconomics

the study of the economic behavior and decision making of small units, such as individuals, families, and businesses

Efficiency

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

factors of production

Land, labor, and capital; the three groups of resources that are used to make all goods and services

production possibilities curve

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

household

a person or group of people living in the same residence

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

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

Trade-off

an alternative that we sacrifice when we make a decision

market

an arrangement that allows buyers and sellers to exchange thing

traditional economy

an economy that relies on habit, custom, or ritual to decide what to produce, how to produce it, and whom to distribute it to

incentive

an expectation that encourages people to behave a certain way

want

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

firm

an organization that uses resources to produce a product, which it then sells

command economies

another name for centrally planned economies

capital

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

thinking at the margin

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

market economy

economic decisions are made by individuals and are based on exchange, or trade

mixed economy

market based economic systems in which government plays a limited role

factor market

market in which firms purchase the factors of production from households

land

natural resources that are used to make goods and services

goods

physical objects such as clothes or shoes

Services

Actions or activities that one person performs for another

Scarcity

Limited quantities of resources to meet unlimited wants


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