Economics chapter 1: the fundamental economic problem

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Utility

A good's or service's capacity to provide satisfaction which varies its the needs and wants for each person.

Productivity

A measure of the amount of output produced by the amount of inputs within a certain time. It increases its efficient use of scarce resources.

Macroeconomics

Examines the behavior of entire economies

Production possibilities frontier diagram

Illustrates the conquer of opportunity cost. It shows the combinations of goods and/or services that can be produced when all productive resources are used.

Specialization&division of labor

Improve productivity because they lead to more proficiency (and greater economic interdependence).

Goods

Items that are economically useful or satisfy an economic want. They are tangible and can be classified as consumer/capital and durable/no durable.

Interdependence

Reliance on others and their reliance on us to provide goods and services. Economy's productivity may be affected by this.

Factors of production

Resources necessary to produce what people want or need

Entrepreneurs

Risk-takers who combine the land, labor, and capital into new products

What must we produce?

Society must choose based on its need

For whom should we produce it?

Society must choose based on its population and other available markets

How should we produce it?

Society must choose based on its resources

Wealth

The accumulation of goods that are tangible, scarce, useful, and transferable to another person. Wealth does not include services.

Trade-offs

The alternative choices people face in making an economic decision. A decision-making grid lists the advantages and disadvantages of each choices.

Scarcity

The condition here unlimited human wants meet limited resources

Opportunity cost

The cost of the next best alternative among a person's choices. It's the money, tie, or resources a person gives up, or sacrifices, to make his final choice.

Capital

The means by which something is produced such as money, tools, equipment, machinery, and factories. (Enable to produce)

Producers

The people who make things that satisfy consumers needs and wants

Consumers

The people who purchase things;they use goods and services to satisfy wants and needs

Production

The result of land, capital, labor, and entrepreneurs, creating goods and services

Land

The society's limited natural resources-landforms, minerals, vegetable, animal life, and climate

Economics

The study of how people satisfy wants its scarce resources

Microeconomic

The study of the choices made by economic factors such as households, companies, and individuals

Labor

The workers who apply their efforts, abilities, and skills to production

Factor market

Where people earn their incomes

Product maret

Where people use their income to buy products.

Services

Work performed for someone and are intangible

Value

Worth expressed in dollars and cents. Scarcity by itself is not enough to create value. For something to have value, it must also have utility


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