Unit 1: Introduction to Economics

Goods

tangible items

Services

tasks that one person performs for another in return for payment

Human Resources

Labor

Natural Resources

Renewable and Exhaustible

Capital Resources

money and human creations used to produce goods and services

Entrepreneur

person who risks capital to start a business

Scarcity

the condition facing all societies because there are not enough productive resources to satisfy wants and needs

Five economic systems

Traditional, Pure Market, Command, Mixed Market, Transitional

Consumer Sovereignty

consumers have ultimate control over what is produced

Maximizing utility

increasing level of satisfaction

Rational Self-Interest

each individual tries to make the best choices for themselves

Cost-Benefit Analysis

weighs the benefits of an action against its costs

Marginal Analysis

adding one more product or item

Economize

making decisions according to the best combination of costs and benefits

Trade-Offs

alternates that consumers give up when they make choices

Opportunity Cost

Value of the next best alternative you must give up

Profit

Total Revenue - Total Costs

Total Cost

Fixed Costs + Variable Costs

Comparative Advantage

Being able to produce something using fewer resources than other producers require