Unit 1 Econ Vocab

Economics

The study of choices and of the incentives behind those choices

Need

A good or service that is necessary for survival

Want

A good or service that is desirable but is not necessary for survival

Durable Good

A good sold to consumers that is expected to last for at least three years

Nondurable Good

A good that is sold with the expectation that it will be consumed within three years

Consumer Good

A final good that is sold to the end user for their consumption

Physical Capital

The physical objects used in the production or sale of a good or service.

Scarcity

The concept that desirable things have a limit to their quantity so we must make choices.

Factors of Production

The resources that can be combined to create a business. Also called Pr__u___ve __sou_c_s

Production Possibilities Curve

A graph that shows the different amounts of two goods or services that can be created at a given point in time

Opportunity Cost

The idea that by choosing to use any resource in a given way, you have paid a cost equal to the next best alternative.

Trade-off

The idea that by choosing to use any resource in a given way, you give up the ability to use that resource for all of its other possible uses

Human Capital

The knowledge, skills, and abilities that a person puts into production or sale of a good or service. They are one part of H____ Resources and are also called Mental C_____

Specialization

Choosing to focus on a limited number of tasks instead of trying to do everything.

Standard of Living

The quality of life experienced by the average person in any given area.

Law of Increasing Cost*

The idea that the marginal cost needed to continue gaining the same marginal benefit will eventually start to increase.

Traditional Economy

An economic system that has its primary focus on maintaining current customs, methods and beliefs.

Market Economy

An economic system that has its primary focus on maximizing individual choice and minimizing outside control. Also called a __re n___rise.

Command Economy

An economic system that has its primary focus on maximizing control and minimizing individual choice.  Also called a C_n__a___ Pla__e_ E_o___y.

Mixed Economy

 An economic system that is a blending of the features from all other types of economic systems.

Privatization

The act of reducing or eliminating government control while moving towards greater private control of a business or industry.

Free Enterprise

An economic system that has its primary focus on maximizing individual choice and minimizing outside control.

Incentive

Anything that influences people to either act or not act in a given way.

Profit Motive

The desire for financial gain that acts as an incentive to participate in any economy.

Consumer Sovereignty

The idea that the customers are the ultimate decision makers who control an economy.

Marginal Product

The additional amount produced after taking a given action.

Marginal Revenue

The additional benefit gained from taking a given action, usually expressed in monetary terms.

Marginal Cost

The additional cost incurred from taking a given action.

Market Failure

Any time in which a market fails to result in an efficient outcome.

Public Good

A good produced by the government for public consumption.

Externality

An unintended side effect that occurs with the use of any good or service.

Poverty Threshold

The minimum amount of money needed to survive.  Also called the P__ert_ L___