Chapter 1
Terms
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- human capital
- the skills and knowledge gained by a worker through education and experience
- efficiency
- using resources in such a way as to maximize the production of goods and services
- production possibilities frontier
- the line on a production possibilities graph that shows the max possible output
- want
- an item that we desire but that is not essential to survival
- entrepreneur
- ambitious leaders who combines land, labor, and capital to create and market new goods and services
- need
- something like air, food, or shelter that is necessary for survival
- land
- natural resources that are used to make goods and services
- production possibilities curve
- a grapf that shows alternative ways to use an economy's resources
- capital
- any human-made resources that is used to create other goods and services
- shortage
- a situation in which a good or service is unavailable
- opportunity costs
- the most desirable alternative given up as the result of a decision
- economics
- the study of how people seek to satisfy their needs and wants by making choices
- trade-off
- an alternative that we sacrifice when we make a decision
- guns or butter
- a phrase that refers to the trade-offs that nations face when choosing whether to produce more or less militayr or consumer goods
- factors of production
- land, labor, and capital; the three groups of resources that are used to make goods and services
- scarcity
- limited quantities of resources to meet unlimited wants
- services
- actions or activities that one person perfroms for another
- labor
- the effort that ppl devote to a task for which they are paid
- underutilization
- using fewer resources than an economy is capable of using
- law of increasing costs
- law that states that as we shift factors of production from making one good or service to another, the cost of producing the second item increases
- cost
- to an economist, the alternative that is given up b/c of a decision
- thinking at the margin
- deciding whether to do or use one additional unit of some resource
- physical capital
- all human-made goods that ares used to produce other goods and services; tools and buildings
- goods
- physical objects such as clothes or shoes