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Macro-Economics
Vocabulary Chap 1
| Question | Answer |
|---|---|
| Scarcity | limited resources and unlimited wants |
| Economics | the study of how people try to meet unlimited needs and wants with limited resources |
| Need | basic requirement for survival |
| Want | a desired item or service not required for survival |
| Factors of Production | resources needed to produce goods and services: Land, Labor, Capital, and Entrepreneurs |
| Land | natural resources ex: deserts, fertile fields, forests, minerals, livestock, sunshine, climates, etc. |
| Capital or Capital Goods | tools, equipment, machinery, and factories used in the production of goods and services |
| Financial Capital | money used to buy the tools and equipment used in production |
| Labor | people with all their effort, skills, and abilities *does not include entrepreneurs, which are in a different category |
| Entrepreneur | risk-taker in search of profit who does something new with existing resources |
| Production | process of creating goods and services |
| Gross Domestic Product or GDP | dollar value of all finished goods, services, and structures produced within a country's borders in a 12-month period *Formula: C+Ig+G+Xn |
| Economic Products | goods and services that are useful, relatively scare, and transferable to others |
| Good | item that is useful and satisfies a need or a want |
| Consumer Good | intended for final use by individuals |
| Capital Good | manufactured goods are used to produce other goods and services |
| Service | work that is performed for someone |
| Paradox of Value | situation where some needs have little monetary (money) value, but some wants have much higher monetary (money) value ex: water and diamonds |
| Utility | capacity to be useful and provide satisfaction |
| Wealth | accumulation of goods |
| Market | mechanism that allows buyers and sellers to exchange a certain economic product |
| Factor Markets | markets where resources used in production (equipment, ect) are bought and sold |
| Product Markets | markets where producers sell their goods and services to consumers |
| Economic Growth | a nation's total output of goods and services increases over time |
| Productivity | measure of the amount of output produced by a given amount of inputs in a specific period of time |
| Division of Labor | work is arranged so that individual workers do fewer tasks |
| Specialization | people or machines perform tasks that they can do relatively more efficiently than others |
| Human Capital | the sum of skills, abilities, health, and motivation of people |
| Economic Interdependence | two or more groups relying on each other to provide the goods and services for the economy |
| Trade-Offs | alternative choices |
| Opportunity Cost | the cost of the next best alternative when one choice is made over another ex: money, time, resources, ect. |
| Production Possibility Frontier | a diagram representing various combinations of goods and/or services an economy can produce when all productive resources are fully employed |
| Cost-Benefit Analysis | way of thinking that compares the costs of an action to the benefits received |
| Free Enterprise Economy | economy in which the individuals and business owners answer the majority of the 'what', 'how', and 'for whom' questions rather than the government |
| Standard of Living | quality of life based on the possession of the necessities and luxuries that make life easier |
Created by:
kvanolson
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