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Definition
A condition facing all socities because there are not enough productive resources to satify people's unlimited wants. Due to scarcity, trade-offs have to be made. At times, some parts of society will be satisfied while others are not, and vice versa.
EX: 700 million people in 43 countries suffer from water scarcity today |
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The accumulated knowledge, skill, and experience of the labor force. It is also the economic value of an employee's skill set. Human capital can increase if employees are invested in.
EX: Because an employee was educated and trained by a company, this employee's human capital rose
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| The broad category of human efforts, both physical and mental, used to produce goods and services. This is very similar to human capital. This has also been seen as an offensive term bc it refers to humans as merely resourses. |
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| Productive Resources[image] |
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The inputs used to produce the goods and services people want. It can be separated into 3 categories. These categories are land, labor, and capital. These are factors of production.
EX: Coal, human work, and buildings fall into these three categories.
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Definition
The physical and mental effort used to produce goods and services. Labor is one of 3 means of production. This labor is completed by humans and exchanged for wages.
Current unemployment rate: 7.4%
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A profit seeker who develops a new product or process and assumes the risk of profit or loss. Entrepreneurs drive our country with innovation. They have the ability to completely transform an industry.
EX: The iPod transformed the music industry
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Natural Resources
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Definition
So called "gifts of nature" used to produce goods and services. It includes both renewable and non-renewable resources. This are part of the 3 categories of means of production.
EX: oil
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All human creations used to produce goods and services. These are acquired by society saving money which can be invested in means of production. They are not goods for immediate consumption.
EX: factories, trucks, and machines
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Definition
An item you can see, feel, and touch. It requires scarce resources to produce and satisfy human wants. This is similar to a commodity but not a service because a service is not physical.
EX: cars
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Definition
Something not physical that requires scarce resources to produce and satisfies human wants. This is different from a good because it is not physical. One cannot have exclusive ownership of a service. Services all depend on employees successfully interacting with customers in an enjoyable way.
EX: bellhop
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Term
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Definition
The means by which buyers and sellers carry out exchange. Most exchanges consist of a trading of goods for money. If there is only one seller in the market, it becomes a monopoly and that seller has total control.
EX: stock market
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Definition
An examination of the additional benefits of an activity compared to the additional costs of that activity. This is used to make decisions to maximize profits. It is also apart of the average persons decision-making throughout the day.
EX: going into the shorter line at McD's because you value your time
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Definition
Study of economic behavior in particular markets. This usually pretains to markets where buying and selling takes place. This studies how the behavior of the markets affects supply and demand for goods and services.
EX: the market for computers or for unskilled labor
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Study of the economic behavior of the economy as a whole. This deals with GDP, unemployment rates, price indices, national income, and consumption. Micro- and Macroeconomics are the two most general fields in economics.
EX: national economy
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| The value of the best alternative passed up for the chosen item or activity. By choosing one option, the potential is lost for possible bigger and better opportunities. This is used in everyday life. |
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A cost you have already paid and cannot recover, regardless of what you do now. Sunk Costs are not future costs because they have already happened. They may just have not taken effect yet.
EX:A company that has spent $5 million building a factory that is not yet complete, has to consider the $5 million sunk, since it cannot get the money back. It must decide whether continuing construction to complete the project will help the company regain the sunk cost, or whether it should walk away from the incomplete project.
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Definition
This is how money flows through the economy. This shows how everything in the economy is dependent on each other. This is more theoretical and modern money is much more complicated.
EX: Money flows to workers in the form of wages, and money flows back to firms in exchange for products
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Definition
Fluctuations reflecting the rise and fall of economic acivity realtive to the long-term growth trend of the economy. The 5 stages are growth, peak, recession, trough, and recovery. Today they are very irregular.
EX: Since the World War II, most business cycles have lasted three to five years from peak to peak. The average duration of an expansion is 44.8 months and the average duration of a recession is 11 months.
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