Ch.1 Econ Study Guide

Differences between wants and needs

Want: something you desire

Need: something essential for survival

Economics def

the study of how people & countries choose to use their scarce resources to satisfy their unlimited wants & needs

Microeconomics

how households, companies, and individual markets use their resources

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ex: apple company and it’s phones

Macroeconomics

the economy as a whole

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ex: technology industry as a whole

Consumers

those who purchase goods and services to satisfy their wants and needs

Producers

those who make the goods and services

Goods and Services (def of each)

Goods: an object that can be purchased

Services: actions or activities that are provided by a fee

list factors of production

1. land
2. labor
3. Capitol
4. Entrepreneurship

Natural resources (land)

goods provided by nature that can be used to produce goods and services

Human resources (labor)

effort that humans exert in providing goods and services

Capital goods

goods that have been manufactured in order to make other goods ex:hammer

Entrepreneurship

the risk one takes in starting a new business or introducing a new good or service

Scarcity

condition that occurs when limited resources reach unlimited wants and needs

Productivity

rate at which goods are produced, and the amount produced

Trade-off

the sacrifice of one good to purchase or produce another good

Opportunity cost

the value of the next best alternative that is given-up when the trade off is made

fixed cost

the price that never changes

variable cost

the price that changes

marginal cost

the extra cost of adding one unit

marginal benefit

the extra benefit of adding one unit

Production Possibility curve

\- a graphic illustration of all the possible combinations of two goods or services that can be produced in a given period of time

* inside the curve: inefficient use of resources
* on the curve line: sufficient use of resources
* outside the curve: impossible