Unit 1 Economics Vocabulary

Economics
The study of how people use their scarce resources to satisfy their unlimited wants
Scarcity
A condition facing all society because there is not enough productive resources to satisfy peoples unlimited wants.
Shortage
At any given price, the amount by which quantity demanded exceeds quantity supplied; a shortage usually forces the price up.
Factors of Production
(also called productive resources), There are three categories:
a) Human resources
b) Natural resources
c) Capital resources
Goods
An item you can see, feel, and touch and that requires scarce resources to produce and satisfy human wants.
Services
Something not physical that requires scarce resources to produce and satisfy human wants.
Capital
Any human-made resource that is used to create other goods and services.
Physical capital
The machines, buildings, roads, airports, communications networks, and other manufactured creations used to produce goods and services; also called capital goods.
Human capital
The accumulated knowledge, skill, and experience of the labor force.
Entrepreneurship
A profit-seeker who develops a new product or process and assumes the risks of profit or loss.
Productivity
The value of output produced by each additional unit of a resource; the ratio of output to a specie measure of input.
Utility
The satisfaction from consumption; sense of well being.
Opportunity costs
The value of the best alternative passed up for the chosen item or activity.
Production Possibilities Frontier
Shows the possible combinations of the two types of goods that can be produced when available resources are employed fully and efficiently.
Production Possibilities Curve
Production Possibilities Curve
A graph that shows alternative ways to use an economy’s resources.
Economic efficiency
Achieve the maximum fulfillment of wants using the available productive resources.
Productivity (I know its repeated but what the heck, its on the worksheet)
The value of output produced by each additional unit of a resource; the ratio of output to a specie measure of input.
Traditional Economics
Economic system shaped largely by custom or religion.
Market Economy
Pure Market Economy:An economic system wit no government involvement so that private firms account for all production. Market Economy:Describes the U.S. economic system, where markets play a relatively large role.
Transitional Economy
An Economic system in the process of shifting from Central Planning to competitive market.
Mixed Economy
An economic system that mixes central planning with competitive markets.
Centrally Planned/ Command Economy
An economic system in which all resources are government-owned and production is coordinated by the central government.
Circular flow model
A figure that describes the flow of resources, products, income, and revenue among economic decision makers.
Factor Market
Market in which firms purchase the factors of production from households.
Product Market
A set of arrangements by which goods and services are bought and sold.
Households
The most important economic decision maker, consisting of all those who live under one roof.
Economic Freedom
Guarantee that business, workers, and consumers have a high degree of freedom in their economic activities.
Economic Efficiency
Achieve the maximum fulfillment of wants using the available productive resources.
Economic Equality
The fairness with which an economy distributes its resources an wealth.
Economic Security
Provide for those who are chorally ill, disabled, laid off, aged, or otherwise unable to earn minimal levels of income.
Economic Stability
A situation in which there is economic growth , rising national income, high employment, and steadiness in the general level prices.
Competition
Struggle among producers for the dollars of consumers.
Self Interest
Ones own personal gain
Invisible Hand
Term economist use to describe the self regulating nature of the market. It was created by Adam Smith who believed competition was good for the economy.
Circular Flow diagram
Circular Flow diagram
The flow of resources from households to firms and of products from firms to households. These flows are accompanied by reverse flows of money from firms to households and from households to firms.
Socialism
Social and political philosophy based on belief that democratic means should be used to evenly distribute wealth throughout a society.
Capitalism
( also called market systems) An economic system in which individuals, not the government control the production and distribution of goods and services.