Econ part 1

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Economics

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23 Terms

1

Economics

``````````````````````````````````````````````The study of how people seek to satisfy their needs and wants by making choices.

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2

Scarcity

Limited amounts of goods and services that are available to meet unlimited wants.

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3

TINSTAAFL

“There is no such thing as free lunch” acronym for the idea that everything has a cost forces us to have to make choices.

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4

Shortage

When consumers want more of a good or service than producers are willing to make available at a particular price.

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5

Goods

Physical objects that someone produces ex. food clothing video games

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6

services

actions or activities that one person performs for another usually for a fee ex. medical care

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7

Factors of production

The resources used to make all goods and services.

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8

Land

All natural resources used to produce goods and services ex. water, iron, coal, forests

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9

Physical capital

All human made goods that are used to produce other goods and services, ex tools,factories

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10

entrepreneurs

People who decide how to combine resources to create new goods and services.

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11

trade-off

Act of giving up one benefit in order to gain another, great benefit.

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12

guns or butter

Choices that government face when choosing whether to spend money on the military or domestic needs.

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13

Opportunity cost

The most desirable alternative somebody gives up as a a result of a decision.

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14

Thinking at the margin.

Deciding to use one additional unit of some resource

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15

Production possibilities curve

A graph that shows alternative ways to use an economys resources

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16

underutilization

Using fewer resources than an economy is capable of using.

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17

Efficiency

Using resources in such a way as to maximize the output of goods and services.

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18

Utility

The capacity to be useful to someone, the most important reason for buying something.

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19

economy

All the activity in a nation that together affects the production, distribution, and use of goods and services.

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20

Relationship between marginal cost and marginal benefit when deciding to add an additional unit-

If the marginal benefit is greater than the cost it would be a good idea to add a additional unit. But if the cost is higher than the benefit its not a good idea to add another unit.

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21

How might a business or a nation’s use a production possibilities curve

A business or nation can decided how best to use its resources.

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22

What does a country’s production possibilities depend on.

Its technological level and the resources it has available.

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23
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