Unit 1 Basic Economics

Scarcity

Insufficient resources to meet unlimited wants.

Economics

Study of resource allocation to satisfy wants.

Need

Basic requirement for survival, e.g., food.

Want

Desire to satisfy a need, not essential.

TINSTAAFL

Concept that nothing is truly free; costs exist.

Factors of Production

Resources used to produce goods and services.

Land

Natural resources used in production processes.

Labor

Human effort used in the production of goods.

Capital

Man-made resources used to produce goods.

Entrepreneurship

Skill to combine resources for business operation.

Gross Domestic Product (GDP)

Total dollar value of final goods/services produced.

Good

Economically useful item satisfying a want.

Consumer Good

Goods intended for final use by individuals.

Capital Goods

Manufactured goods used to produce other goods.

Service

Work performed for someone else.

Consumer

Individual using goods/services to satisfy needs.

Value

Worth expressed in monetary terms.

Utility

Capacity to provide satisfaction or usefulness.

Wealth

Accumulation of tangible, scarce, useful products.

Trade-Offs

Alternative choices in economic decision-making.

Opportunity Cost

Value of the next best alternative forgone.

Production Possibilities

Combinations of goods/services an economy can produce.

Cost-Benefit Analysis (CBA)

Assessment of advantages versus disadvantages of decisions.

Marginal Analysis

Comparison of additional benefits and costs of activities.