Economics - 1.1 (Scarcity)

This flashcard set covers the vocabulary terms regarding scarcity, economic resources (factors of production), and decision-making concepts like opportunity cost and trade-offs.

Economics

The study of trying to solve the problem of meeting unlimited wants and needs with limited resources.

Scarcity

The condition where there is less of an item than is wanted (the big picture); it forces societies to answer the three basic questions of production.

Shortage

A temporary market imbalance where quantity supplied is less than quantity demanded at the current price, leading to prices increasing or running out of the item.

Land (Natural Resources)

Society's limited resources, such as corn used for cornbread or oil for a delivery truck.

Labor (Human Resources)

Workers applying their efforts and abilities to create something, including both high skilled and low skilled individuals.

Physical Capital

Tools, equipment, and facilities used to produce goods, such as a mill to grind corn, bookkeeping software, or a factory building.

Entrepreneurship

Risk-takers, such as a company founder, who combine land, labor, and capital to produce goods or services.

Human Capital

The skills and knowledge humans can learn which impact the productivity of labor; the more we learn, the more we can produce.

Three Basic Questions

The fundamental questions scarcity forces societies to answer: What to produce, How to produce, and For Whom to produce.

Trade-offs

All the choices we have when making a decision.

Opportunity Cost

The cost associated with the choices we make, specifically defined as the second choice or what we did not pick.