Econ Chapter 1: Part 1 Quiz

Vocab

Economics

the study of human nature in regards to decision making and scarcity.

Scarcity

the basic, permanent condition in which unlimited wants/needs exceed limited resources.

productive resources/factors of production

the inputs used to produce goods and services

inputs

scarce resources that go into making a product

outputs

the goods or services that are created using inputs

natural resources

“land” use of resources from earth in production.

ex) crops, water, trees, animals

Human resources

“labor”. The effort and time put into production for which someone is paid.

EX) hiring a cook, cleaner, or cashier.

Physical Capital

physical, made-made tools, machines, and structures involved in the production process.

ex) hammers, mixing-bowl, spatula

Human capital

the skills and knowledge a person gains through training and education.

ex) going through trade school or special camps.

Entrepreneurship

bringing resources and capital together. to produce a good/service

ex) local coffee shop or bakery.

Resource allocation

the process of distributing available resources to produce goods and service. In the U.S we use market/price.

Trade-offs

the things of value that you are giving up to gain another.

opportunity cost

the value of the highest valued trade-off of your decision.

Marginal Benefit

additional positive benefits one receives from undertaking one more unit of an action

Marginal cost

additional amount of effort, expense, or time from undertaking one or more unit of an action.

Rational Decision making

when the marginal benefits are greater than the marginal costs of a decision.