Econ Chapter 1 Terms

Wants

Things that people desire, but that are NOT necessary for survival

Needs

Things that are essential for survival

Goods

The physical objects that people produce

Services

The actions or activities that one person performs for another

Economics

The study of scarcity

Scarcity

The idea that society has limited amounts of resources & therefore cannot produce all the goods and services people wish to have

Factors of production

The resources that are used to make finished goods and services.

Entrepreneurship, land, labor, & capital.

Entrepreneurs

People who start businesses

Land

This includes all of the natural resources used to make goods and services

Labor

Work and effort that people devote to tasks for which they are paid

Capital

Man made resources that are used to produce finished goods and services

Physical Capital

OBJECTS used to create goods and services

Human Capital

Knowledge and skills a WORKER gains through education

Trade-off

Giving something up to gain something else of greater benefit

Opportunity Cost

The choice that’s given up when a decision is made.

Marginal Thinking

Process of deciding whether to do or use one more additional unit of a resource

Marginal Cost

Extra cost of adding one more unit

Marginal Benefit

Extra benefit of adding one more unit