Terms
1. Scarcity - fundamental problem of economics;
exists because our wants and needs are unlimited but our
resources to meet those
needs are limited.
2. Allocation - process of choosing which
needs will be satisfied; distributing resources.
3. Tradeoff - choices people make relative
to their resources; choosing one thing over another.
4. Economics - studying how society allocates
its scarce resources.
5. Macroceconomics - studying the "large choices"
of the economy; things that affect the entire economy.
6. Microeconomics - studying the "small choices"
of individuals and businesses.
7. Opportunity cost - the value of what we
give up when we make a choice; "what we lose when we choose"
8. Resource - anything needed for production
9. Factors of Production (4)
a. natural resources -
land and anything underground in its natural state
b. labor - human effort
to produce a good or service
c. capital - tools used
in production
d. entreprenuership - "special
talent" of seeking out opportunities and taking risks to produce a good
or service
10. Needs - things we have to have to survive
(food, shelter, clothing)
11. Wants - things that make our lives easier
(tv, phone, etc.)