Unit 1 Vocabulary

Opportunity Cost

the value of the next-best alternative that must be sacrificed when a choice is made

Scarcity

the fundamental economic problem where unlimited human wants exceed the limited resources available to satisfy them

Cost-Benefit Analysis

a systematic decision-making process used to compare the total expected pros (benefits) against the total expected cons (costs) of an action to determine its viability

Marginal Analysis

the examination of the additional benefits and additional costs of an activity to determine whether one more unit of that activity should be pursued

Utility

a measure of the total satisfaction, happiness, or "usefulness" a consumer derives from consuming a good or service

Diminishing Marginal Utility

the principle that as a person consumes more of a specific good, the additional satisfaction gained from each new unit decreases

Labor

the actual activity of working — producing goods or services; occurs in time and produces value

Labor-Power

a worker’s capacity to work — their time, energy, skills, and physical ability; what is sold to employers

Wage

the price paid for labor-power, not for the full value of what labor produces

Exploitation

a situation in which workers produce more value than they receive in wages; it is structural, not moral

Commodity

a good or service produced for exchange rather than direct use; under capitalism, both products and labor-power are this

Exchange Value

the value of a commodity in the market, expressed through price

Use Value

the usefulness of a commodity — its ability to satisfy a need or want

Capital

money or assets used with the purpose of generating more money; it is not a thing, it is a process

Accumulation

the continual reinvestment of surplus to generate additional surplus; it is the driving force of capitalism

Surplus Value

the value produced by workers beyond what they receive in wages; the source of profit

Necessary Labor

the portion of the working day during which the worker produces value equal to their wage (i.e., the cost of reproducing labor-power)

Surplus Labor

the remaining portion of the working day during which the worker continues producing value that is not paid back to them

Working Day

the total length of time a worker is employed; the division of this into necessary and surplus labor is the critical analytical move

Rate of Exploitation

the ratio of surplus labor to necessary labor; measures intensity, not cruelty