Unit 7 - Incentives and Profits

factors of production

natural resources, Human Resources, capital resources, entrepreneurship

choice

ability of producers/consumers to decide among alternatives

trade-off

giving up one thing of value to gain another thing of value

production

organized process and activity of using factors of production to produce goods/services

specialization

devotion of resources to a specific task

production possibilities frontier

graph showing alternative combinations of amount two goods an economy can produce with specific inputs

innovation

new and better ways of doing something

incentives

motivations for behavior

steps of cost-benefit analysis (3)

identifying possible costs and benefits of an action, pricing costs and benefits (can include estimates), comparing total costs and benefits

marginal benefit

benefit a person, business, or government receives after the cost of an economic decision

marginal cost

cost of producing one more unit

innovation for a competitive edge

thrives as producers seek new ways to outdo other producers

bonuses

extra money usually tied to excellent work or seasonal gift

business grants

money given by the government to a business in need, doesn’t have to be paid back, used to encourage development and location within a community

paycheck

pay is an incentive, increase in pay is a great incentive

profit sharing

payments in money or stocks paid to employees when companies make a profit

promotions

increase in an employee’s responsibilities, usually higher pay, advances their position/career in a business

tax credits

amounts of money that can be deducted from income and reduce taxes

demotion

lowering an employee’s position and pay as punishment

dock in pay

taking money out of an employee’s pay for hours they didn’t work

fines and fees

punishment for wrong doing; paid when a service might not have been needed

distribution

the way total output is distributed among individuals in a population