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)