Business 2.1 Economics

Capital Goods

The physical assets used to produce goods and services, including machinery, equipment, buildings, and tools.

Consumer

One who actually uses the product or service (also called the final user, or final customer).

Consumption

The using of goods and services by people or by the economy in general.

Deflation

The decrease in the general level of prices in an economy.

Distribution

To categorize, sort, and transport goods to all their final destinations as efficiently, inexpensively, and carefully as possible.

Economic Good

A good or service that has a benefit (or utility) to society, has value and therefore can be traded and exchanged using money, and has some degree of scarcity.

Economic Utility

Something’s usefulness and the degree to which wants are satisfied.

Economic Want

Desire for goods, services or intangible items that can only be acquired by spending money – items like a car, or a haircut, or a patent.

Economics

Economics is the study of how individuals and societies make decisions about resources, production, distribution, exchange, and consumption of goods and services, given unlimited and competing wants, and given the scarcity of resources.

Economizing

Reducing the amount of money spent in order to save money.

Inflation

The increase in the general level of prices in an economy.

Macroeconomics

The study of the behavior, performance, structure, and decision-making of an economy as a whole.

Microeconomics

The study of behavior and decision-making of individuals and businesses in an economy.

Natural Resources

Materials and substances found in nature that are used for economic gain, including air, water, sun, fertile land, plants, timber, fossil fuels, and minerals.

Noneconomic Want

Desires that don’t require money to be obtained, like talking to a friend.

Opportunity Cost

The loss of potential gain from among other alternatives, when one alternative is chosen.

Production

The making of products from raw materials and other inputs like labor, machinery, and tools.

Resources

All the components needed for production including natural resources, labor, capital goods, and expertise.

Scarcity

The reality that people’s wants always exceed the resources available to fulfill those wants.

Total Consumption

The total amount of goods and services used by an economy.

Trade-off

Choosing between two things that can’t be had or done at the same time; so it’s giving up something you want in exchange for something else you want, often as a compromise.