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What is Econ Ch 1
Chapter 1 Essential Vocab for Understanding Economics
| Term | Definition |
|---|---|
| Scarcity | the conditions that results from society not having enough resources to produce all the things people would like to have. |
| Economics | the study of how people try to satisfy seemingly unlimited and competing needs and wants through the careful use of relatively scarce resources |
| need | a basic requirement from survival, such as food, clothing, and shelter |
| want | simply something we would like to have but is not necessary for survival. |
| good | a useful, tangible item, such as a book, car or MP3 player, that can be used to satisfy a need or want |
| durable good | one that lasts three years of more when used on a regular basis |
| nondurable good | an item that lasts for fewer than three year when used on a regular basis |
| consumer good | it is intended for final use by individuals, such as shoes, a shirt, or an automobile |
| capital good | a tool or good such as machinery or equipment that is used by business to produce other products. |
| service | work that is performed for someone |
| value | a term that refers to a worth that can be expressed in dollars and cents |
| paradox of value | apparent contradiction between the high value of a nonessential item and the low value of an essential item. |
| utility | ability or capacity of a good or service to be useful and give satisfaction to someone |
| wealth | sum of tangible economic goods that are scarce, useful, and transferable from one person to another; excludes services |
| gross domestic product or GDP | monetary value of all final goods, services, and structures produced within a country's borders in a 12 month period. |
| factors of production | productive resources needed to produce goods: the four factors are land, capital, labor and entrepreneurship |
| land | natural resources or "gifts of nature" not created by human effort; one of the four factors of production. |
| capital | tools, equipment, and factories used in the production of goods and services; one of the four factors of production |
| labor | people with all their abilities and efforts; one of the four factors of production; does not include entrepreneur |
| entrepreneurs | risk-taking individuals who introduce new products or services in search of profits; one of the four factors of production |
| transformed | to change the nature of something |
| production possibilities curve | diagram representing all possible combinations of goods and or services an economy can produce when all productive resources are fully employed. |
| opportunity cost | cost of the next best alternative use of money, time or resources, when one choice is made rather than another |
| trade-offs | alternative that must be given up when one choice is made rather than another |
| consumerism | a social movement that was aimed at promoting the interests of consumers |
| economic growth | increase in a nation's total output of goods and services over time. |
| productivity | measure of the amount of output produced in a specific time period with a given amount of resources; normally refers to labor, but can apply to all factors of production |
| human capital | sum of people skills, abilities, health, and motivation |
| division of labor | division of work into a number of separate different workers |
| specialization | assignment of tasks to the workers, factories, regions, or nations that can perform them most efficiently. |
| economic interdependence | mutual dependence of the economic activities of one person, company, region, or nation on those of another person, company, region, or nation. |
| market | meeting place or mechanism through which buyers and sellers of an economic product come together; may be local, regional, national, or global |
| mechanism | process or means by which something can be accomplished |
| factor markets | markets in which productive resources are bought and sold |
| product markets | market in which goods and services are bought and sold |
| economic model | simplified version of a complex concept or behavior expressed in the form of a graph, figure, equation, or diagram |
| assumptions | something taken for granted; something we thing is true |
| cost-benefit analysis | comparison of the cost of an action to its benefits |
| free enterprise economy | market economy in which privately owned businesses have the freedom to operate for a profit with limited government |
| standard of living | quality of life based on ownership of necessities and luxuries that make life easier. |
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