Economics Chapter 1

Specialization

assignment of tasks to the workers, factories, regions, or nations that can preform the most efficiently

Production Possibility Curve

diagram representing all possible combinations of goods and/or services an economy can produce when all productive resources are fully employed.

Good vs. Service

A good is tangible item and a service is work or labor preformed by someone or something.

Need vs. Want

A need is a basic requirement for survival such as food, water and shelter. A want is something we would like to have but is not necessary for survival.

Utility

Ability or capacity to meet needs. Some necessities are less expensive because of utility.

Paradox of value

Apparent controdiction between the high value of nonessential item and the low value of an essential item.

Economic independence

Mutual dependence of the economic activities of one person, company, region, or nation on those of another person, company, region, or nation.

Macro Economics

Nations and their things like GDP, unemployment, inflation; larger parts.

Land

Natural resources not created by human effort.

Labor

People with all their abilities and efforts.

Product Market vs. Factor Market

Product market: market in which goods and services are bought and sold. Factor market: market in wick productive resources are bought and sold.

4 types of goods and description

-Durable: lasts 3+ years, ex tools, tractors, automobile -Nondurable: lasts >3 years, ex food, paper, clothing -Consumer: a good intended for final use by individuals -Capital: tools or good such as machinery or equipment that is used by buisnesses to produce other products.

Trade-offs

Is what you give up when you make a choice.

The Factors of Production

Land, Capital, Labor and Entreprenuers .

Entreprenuers

Risk-taking individuals who introduce new products or services in search of profits.

Four characteristics of economic wealth

Scarcity, tangible, have utility, and is transferable.

Scarcity vs. Shortage

Scarcity: economic problem that affects all societies from a combination of scares resources. Shortage: situation where quantity supplied is less than quantity demanded at a given price.

Marginal

The additional cost/benefit of a choice.

GDP

The monetary value of all final goods, services and structures produced within a countries boarders in a 12 month period.

Human Capital

The sum of people's skills, abilities, health, knowledge, and motivation.

Opportunity cost

The value of the next best alternative (money, time, or resources) that would be given up. Opportunity costs that aren't monetary include time and money.

Capital

Tools, equipment, and factories used in the production of goods and services.

Because of scarcity all societies must decide....

WHAT HOW FOR WHOM

Monetary Value

How expensive something is

Division of Labor

Division of work into a number of separate tasks to be preformed by different workers.

GNP

Includes global operations.

Micro Economics

Businesses and consumers; small parts