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Economics Vocabulary

Chapters 1-3 Vocabulary
by

katina hardy

on 18 September 2013

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Transcript of Economics Vocabulary

Economics Vocabulary
the study of how people seek to satisfy their needs and wants by making choices
Economics
the principle that limited amounts of goods and services are available to meet unlimited wants
Scarcity
Something essential for survival such as food or clothing
Need
The physical objects that people, businesses, or governments buy
the human-made objects used to create other goods and services
Physical Capital
Opportunity Cost
Cost/Benefit Analysis
Marginal Cost
Marginal Benefit
Production Possibilities Curve
the most desirable alternative given up as the result of a decision
a process in which you compare what you will sacrifice and gain by a specific action
a process in which you compare what you will sacrifice and gain by a specific action
the extra benefit of adding one unit
a graph that shows alternative ways to use an economy's productive resources
Productions
Possibilities Frontier
Human Capital
Trade-Off
the knowledge and skills gained from education and experience
the alternative that we give up when we choose one course of action over another
a line on a production possibilities curve that shows the maximum possible output an economy can produce
"Guns or Butter"
the idea that a country that produces guns has fewer resources to produce butter (consumer goods), and vice versa
Entrepreneur
Resources
Shortage
Factors of Production
Land
Labor
Capital
Efficiency
Underutilization
Law of Increasing
Costs
Economic System
Anything that people use to make things or do work
a situation in which people want more of a good or service than producers are willing to supply at a particular price
the resources that are used to make goods and services
all natural resources that are used to make goods and services
the effort people devote to tasks for which they are paid
any human-made resource used to produce goods and services
the use of resources in such a way as to maximize the output of goods and services
the use of fewer resources than an economy is capable of using
Goods
an economic principle stating that as production shifts from making one good or service to another, more resources are needed to increase production of the second good or service
the structure that a society uses to produce and distribute both goods and services
Income
the money a person makes
Factor Payment
the income people receive in return for supplying land, labor, or capital
Profit
the amount of money a business keeps after all costs of production have been paid
a person who decides how to combine resources to create goods and services
Services
The actions or activities that one person performs for another
CELL
C
apital
E
ntrepreneurship
L
and
L
abor
Standard of Living
the way of living that is usual for a person, community, or country
Innovation
bringing new methods, products, or ideas in use
Safety Net
a set of programs designed to protect people who face economic hard times
Traditional Economy
the oldest and simplest economic system in which people do things as they have in the past
Market
a place that allows buyers and sellers to exchange things
Specialization
when individuals and businesses do only what they do best
Free Market Economy
an economic system in which decisions on the three economic questions are based on the principle of voluntary exchange
Voluntary Exchange
a transfer of goods, services, or ideas that someone makes willingly
Household
a person or group of people who live together in the same place
Firm
a business that uses resources in order to produce a product or service for sale
Circular Flow
a model that shows the process of exchanges between households and firms
Factor Market
an exchange in which firms purchase the factors of production from households
Product Market
an exchange in which households buy goods and services from firms
Full transcript