MicMac Unit 1 Vocab

Needs

the absolute necessities of life

Wants

desirable things that aren’t necessary for life/existence

Scarcity

a situation when the unlimited wants exceed the limited resources to fulfill those wants

Choice

decisions about how to use resources in order to satisfy basic needs and as many additional wants as possible

Economics

the study of how people and societies use limited resources to satisfy their needs and unlimited wants by making choices

Economists

professionals who study the way society allocates its resources to satisfy its wants

Microeconomics

the study of the EFFECTS of economic factors on individual parts of the economy, such as businesses, workers, and households

Macroeconomics

the study of the IMPACTS of changes to the economy as a whole rather than on an individual part

Goods

tangible items of value

Services

Actions/Activities that are performed
Intangible things of value

Consumer

people who buy goods and services

Consumption

the act of buying goods and services

Economic Resources

things that go into producing goods and services

Factors of Production

the fundamental economic resources- land, labor, and capital- that are combined to produce goods and services in an economy.

Producer

the people and institutions that make and offer goods and services

Natural Resources

raw material that exist on Earth and in the air that humans use to make goods

Human Resources

people whose efforts and skills go into the production of goods and services

Capital Resources

the machines, tools, and buildings used in the production of goods and services

Depreciation

the measure for the decline in the value of capital goods

Entrepreneurship

The process of bring together the three factors of production (and, labor, and capital)

Entrepreneur

An individual who organizes a business and invests time and money in hopes of earning a profit

Trade-Off

when one thing is given up in order to obtain something else

Opportunity Cost

The trade-off of the value of one good or service for the value of another

Production Possibility Curve (PPC)

Graph that illustrates the trade-offs and opportunity costs associated with the production of two goods or services, also called a Production Possibilities Frontier

Absolute Advantage

Ability to produce more of a good or service than another producer that has the same quantity of resources

Comparative Advantage

Ability to produce a good or service at a lower opportunity cost than another producer

Specialization

Focusing production on select goods to increase efficiency

Division of Labor

Assigning different, specific tasks to workers

Mutually Beneficial Trade

Trade between entities that allows for higher total output and consumption than would be possible individually

Gains from Trade

When two countries specialize in commodities in which they have a comparative advantage and exchange goods with one another, allowing them to benefit from increased consumption of goods they would not have without trade

Demand

Consumers' desire and ability to purchase goods and services

Law of Demand

All else being equal, there is an inverse relationship between price and quantity demanded

Determinants of Demand

Factors that affect how much consumers will purchase at every price (number of buyers, income, complementary goods, expectations, substitute goods, tastes and preferences)

Substitute

A good or service that can be used instead of another to satisfy a similar need or want (e.g. butter and margarine)

Complementary

A good or service that is purchased alongside another good or service

Demand Curve

Downward-sloping line that shows an inverse relationship between price and quantity demanded (price on y-axis, quantity demanded on x-axis)

Supply

Amount of a good or service a producer is willing and able to sell at a given price

Law of Supply

All else being equal, there is a positive relationship between price and quantity supplied

Determinants of Supply

Factors that affect supply (price of inputs, # of sellers, tecnological/industrial advancements, govt action, expectation of future profit)

Supply Schedule

a table showing the relationship between the price of a good or service and the quantity supplied when all other determinants are equal

Supply Curve

Upward-sloping line that shows a direct relationship between price and quantity supplied (price y axis, quantity x axis)

Equilibrium Price

Price at which demand and supply curves intersect, price at which the quantity demanded is equal to quantity supplied

Disequilibrium Price

Price that is not at the equilibrium price and can cause surplus or shortage

Surplus

when price is higher than equilibirum, there will be excess supply for that price, and producers will have to accept a lower price

Shortage

when price is lower than equilibirum, supply will be too small to fill demand at that price, and consumers will have to pay a higher price