What is Economics?

distribution

the process of getting a product or service to consumers before the human want can be satisfied

economics

a social science that studies how people acting individually and in groups, decide to use scarce resources to satisfy their wants

goods

items of value that CAN be seen and touched

services

items of value that CANNOT be seen and touched

want-satisfaction chain

the complex process involving millions of people working in thousands of businesses to produce and distribute goods and services to satisfy people's wants

capital

The buildings, tools, and machines people create and use to produce final goods and services (a factor of production)

labor

Human resources that include the physical and mental efforts people use to create goods and services (a factor of production)

benefits

A gain made when you make a choice... people try to maximize these!

costs

A loss made when you make a choice... people try to minimize these!

disincentives

A negative or withdrawn reward like a fine or a punishment

production

A process that combines economic resources so the result is a good or service available for sale

market

An arrangement that allows buyers and sellers to make exchanges... this is the place where choices are made about using scarce resources

market economy

An economy that relies on voluntary trade as the primary means of organizing and coordinating production, this system is also called CAPITALISM or FREE ENTERPRISE

marginal

Means the extra or additional costs or benefits of a decision.

land

Natural resources that are unaltered gifts of natures, such as soil, minerals, timber, and fresh water (a factor of production)

incentives

Positive rewards for making some kind of choice or behaving in a certain way, like higher wages, lower prices, praise, or a good grade

scarcity

The gap between what people want and the resources available to meet those wants... where an inequality exists between wants and the resources available to satisfy them

opportunity cost

The highest valued alternative given up as a result of making a choice. The most-valued opportunity we sacrifice when we make a choice

entrepreneurship

The imagination, innovative thinking, and management skills needed to start and operate a business (a factor of production)

profit

The major goal of a business when the total sales of a product are greater than the total costs... business cannot operate if they do not make a profit

microeconomics

The study of individual consumers and businesses, it examines the choices that individuals, families, and business make.

macroeconomics

The study of the economy as a whole, it seeks to understand economy-wide issues such as inflation, unemployment, poverty, and long-term economic growth

consumption

Using a product or service... completes the want-satisfaction chain