IB Economics SL: Unit 1 Vocab

Scarcity

The fundamental economic problem of having unlimited human wants and needs in a world of limited resources.

Needs

Essential goods and services required for survival (e.g., food, water, shelter).

Wants

Goods and services that are not necessary for survival but are desired by consumers.

Economic Good/Service

A product or service that requires scarce resources to produce and therefore has an opportunity cost.

Free Good

A product with natural abundance that requires no resources to obtain (e.g., air, sunlight).

Renewable Resources

Resources that can be replenished naturally over time (e.g., water, timber).

Opportunity Cost

The cost of the next best alternative that is given up when making a choice.

Economic Systems

The way an economy is organized to allocate resources and goods/services (e.g., free market, mixed, planned).

PPC (Production Possibilities Curve)

A model that shows the maximum output combinations of two goods an economy can achieve when all resources are used efficiently.

Microeconomics

The study of the behavior of individuals and firms in making decisions and how they interact in specific markets.

Equity

The idea of fairness in the sharing and distribution of resources and goods within an economy.

Sustainability

Meeting the needs of the present without compromising the ability of future generations to meet their own needs.

Factors of Production

The resources used to produce goods and services: Land, Labor, Capital, and Entrepreneurship.

Land

All natural resources used in production (e.g., water, oil, fields).

Labor

The human effort, both physical and mental, used in the production process.

Capital

Man-made goods that are used to produce other goods and services (e.g., machines, tools, factories).

Entrepreneurship

The organizing factor that brings the other resources together and takes the risk to produce goods and services.

Physical Capital

Tangible, man-made objects that assist in the production process (e.g., machinery, tools, buildings).