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Glossary of Economics; Principles and Practices Chapter 1, Section 3

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Need
A basic requirement for survival, such as food, clothing, and shelter. Higher-level needs include love, communication, acceptance, knowledge, hope, and accomplishment.
Want
Means of expressing a need.

Food, for example, is a basic need related to survival. The person, however, may "want" pizza. Any number of foods would satisfy the basic need for nourishment.
Free Products
Plentiful things that are free, such as sunshine and air.
Economic Products
Goods and services that are useful, relatively scarce, and transferable to others.

(These products require a price)
Good
A tangible commodity like a book, car, or CD player.
Consumer Good
Intended for final use by individuals.
Capital Good
A manufactured good used to produce other goods and services.

Example: An oven in a bakery; a computer in a high school.
Durable Good
Any good that lasts three years or more when it is used on a regular basis.
Nondurable Good
An items that lasts for less than three years when used on a regular basis.

Examples: Food, writing paper, and most clothing.
Service
Work that is performed for someone
Consumers
People who use goods and services to satisfy wants and needs
Consumption
The process of using up goods and services in order to satisfy wants and needs.
Conspicuous Consumption
The use of a good or service to impress others

Example: Wearing expensive jewelry or driving a flashy car.
Value
An amount, as of goods, services, or money, considered to be a fair and suitable equivalent for something else
Paradox of Value
Some things, such as water, are essential to life, but have little monetary value. Diamonds have a very high value but are not essential to life. In order to have value, and item must be somewhat scarce.
Utility
The capacity of an item or service to be useful to someone.
V = S + U
Value = Scarcity + Utility
Wealth
The sum of those economic products that are tangible, scarce, useful, and transferable from one person to another.
Nation's Wealth
The stockpile of useful, scarce, transferable, and tangible things in existence at a given time.

This includes: Natural resources, factories, stores, houses, motels, clothing, video games, etc.
Production
The process of creating goods or services
Productivity
The efficient use of productive resources
Specialization
Productive inputs do whatever task they are able to do best.

Example: An excellent carpenter with average skills in other areas might want to build a house. He should hire people who specialize in foundations, plumbing, and electrical wiring.
Division of Labor
Takes place when workers perform fewer tasks more frequently. In other words, the person becomes much better at what she does because she performs the same tasks often.

(This is also called specialization!)
Human Capital
The sum of skills, abilities, health, and motivation of people.
Economic Interdependence
The actions in one part of the country or the world can have an economic impact on what happens elsewhere.

Example: Bad weather in Jamaica makes sugar prices rise in America.
Market
A location or other mechanism that allows buyers and sellers to deal readily in a certain economic product.
Factor markets
The markets where productive resources are bought and sold.

Example: Labor that is hired for money, land provided in turn for rent, or money being loaned for interest and invested for profit.
Product Markets
Markets where producers offer goods and services for sale.
Standard of Living
The quality of life based on the possession of necessities and luxuries that make life easier.
Circular Flow of Economic Activity
Shows the high degree of economic interdependence in our economy. Money flows in one direction while goods, services, and the other factors of production flow in the opposite direction.
Free Enterprise Economy
An economy in which consumers and privately owned businesses, rather than government, jointly make the majority of the WHAT, HOW, and FOR WHOM decisions.

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