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Unit 1 Vocabulary ECO.docx - Economics-Topic 1-2 Vocabulary...

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Economics-Topic 1-2 Vocabulary TOPIC 1-Section 1.1: (Pgs. 6-10) 1. Need-something essential for survival such as food or medical care. 2. Want-something we desire but that is not necessary for survival 3. Goods-physical objects that someone produces, such as food, clothing or video games. 4. Services-actions or activities that one person performs for another (Medical care/haircuts) 5. Scarcity-Limited amounts of goods and services are available to meet unlimited wants and needs. This is the Economic problem that will never go away. 6. Economics-the study of how people seek to satisfy their needs and wants by making choices. (People do this as individuals, groups (businesses), or as government). 7. Shortage-occurs when consumers want more of a good or service than producers are willing to make available at a particular price. 8. Entrepreneurs-people who decide how to combine resources to create new goods and services. Assemble the Factors of Production. 9. Factors of Production-the resources used to make all goods and services (land, labor, capital) 10. Land-all natural resources used to produce goods and services (soil, oil, water, iron, coal, forests, etc.) 11. Labor-the effort people devote to tasks for which they are paid. 12. Capital-refers to any human-made resource that is used to produce other goods and services. (Physical and Human) 13. Physical Capital-Human-made objects used to create other goods and services (also called capital goods) Ex: buildings, equipment, computers, tools. 14. Human Capital-The knowledge and skills a worker gains through education and experience. Section 1.2 (pgs. 11-14) 15. Trade-off-the act of giving up one benefit in order to gain another, greater benefit. 16. Guns vs. Butter-a term used to describe one of the common choices facing government: the choice between spending money on military (guns) or domestic needs (butter). 17. Opportunity Cost-The most desirable alternative somebody gives up as the result of a decision. 18. Thinking at the Margin-When making a decision where one must add or subtract one unit, or deciding how much more or less to do you are thinking at the margin. 19. Cost/Benefit Analysis-A decision making process where one compares the opportunity cost and the benefits of a decision. 20. Marginal Cost-the extra cost of adding one unit.
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