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A negative or withdrawn reward like a fine or a punishment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