Chapter 1 - What is Economics?

benefit

the gain or pleasure that it brings

capital

the tools, instruments, machines, buildings, and other constructions that businesses use to produce goods and services

economic model

a description of some aspect of the economic world that includes only those features that are needed for the purpose at hand

economics

the social science that studies the choices of individuals, businesses, governments, and entire societies make as they cope with scarcity and the incentives that influence and reconcile those choices

efficient

a method of doing something where it is not possible to make someone better off without making someone else worse off; a situation that can't be improved upon

entrepreneurship

the human resource that organizes labor, land, and capital to produce goods and services

factors of production

the resources that are used to make goods and services

goods and services

the objects and the actions that people value and produce to satisfy human wants

human captal

the knowledge and skill that people obtain from education, on-the-job training, and work experience

incentive

a reward that encourages an action or a penalty that discourages one

interest

capital earns ______

labor

the work time and work effort that people devote to producing goods and services

land

natural resources that are used to make goods and services

macroeconomics

the study of the performance of the national economy and the global economy

margin

the difference between the value that an activity generates and the cost of the activity

marginal benefit

the additional benefit to a consumer from consuming one more unit of a good or service

marginal cost

the opportunity cost of producing one more unit of a good or service

microeconomics

the study of the choices that individuals and businesses make, the way these choices interact in markets, and the influence of governments

opportunity cost

the most desirable alternative given up as the result of a decision

preferences

what a person likes and dislikes and the intensity of those feelings

profit

entrepreneurship earns ______

rational choice

a choice that compares costs and benefits and achieves the greatest benefit over cost for the person making the choice

rent

land earns ______

scarcity

the limited nature of society's resources

self-interest

an individual's own personal gain

social interest

the choices that are best for society as a whole

tradeoff

An exchange - giving up one thing to get something else.

wages

labor earns ______