Economics Chapter 1- What is Economics?

entrepreneurship

Ability of taking a risk to develop new products and start new businesses in order to make profits

services

Actions that can satisfy wants or needs

technology

Advance in knowledge leading to new and improved goods and services

hypothesis

An assumption involving or more variables that must be tested for validity

macroeconomics

Economic theory dealing with the economy as a whole and decision making by large units such as the government

microeconomics

Economic theory that deals with behavior and decision making by small units such as individuals and firms

production possibilities curve

Graph showing the maximum combinations of goods and services that can be produced from a fixed amount of resources in a given period of time

labor

Human effort directed toward producing goods and services

factors of production

Land, labor, and capital; resources that are used to make all goods and services.

land

Natural resources, surface land, and water

capital

Previously manufactured goods used to make other goods and services

goods

Tangible objects that can satisfy people's wants or needs

productivity

The amount of goods and services that results from a given level of inputs

economy

The production and distribution of goods and services in a society

economic model

Theory or simplified representation that helps explain and predict economic behavior in the real world

opportunity cost

Value of the next best alternative given up for the alternative that was chosen

scarcity

limited quantities of resources to meet unlimited wants

trade-off

sacrificing one good or service to purchase or produce another

economics

the study of how individuals and societies make choices about ways to use scarce resources to fulfill their wants