Economics: Scarcity, Needs, and Wants

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Questions and Answers

Match the economic term with its definition:

Scarcity = The condition that results from society not having enough resources to produce all the things people would like to have Factors of production = Resources required to produce things people would like to have; they include land, capital, labor, and entrepreneurs Consumer good = An item intended for final use by individuals Service = Work that is performed for someone; includes haircuts, home repairs, and forms of entertainment

Match the resource with its description:

Land = Natural resources not created by humans; 'gifts of nature' Capital = The tools, equipment, machinery, and factories used in the production of goods and services; does not include the entrepreneur Labor = People with all their efforts, abilities, and skills Entrepreneur = A risk-taker in search of profits who does something new with existing resources

Match the economic concept with its explanation:

Production = The process of creating goods and services Gross Domestic Product (GDP) = The dollar value of all final goods, services, and structures produced within a country's borders in a 12-month period Capital good = A manufactured item used to produce other goods and services Want = A way of expressing a need; something we would like to have but is not necessary for survival

Match the economic agent with its role:

Labor = People with all their efforts, abilities, and skills Entrepreneur = A risk-taker in search of profits who does something new with existing resources Consumer good = An item intended for final use by individuals Capital good = A manufactured item used to produce other goods and services Signup and view all the answers

Match the economic term with its function:

Need = A basic requirement for survival that includes food, clothing, and shelter Economics = The study of how people try to satisfy what appears to be seemingly unlimited and competing wants through careful use of relatively scarce resources Service = Work that is performed for someone; includes haircuts, home repairs, and forms of entertainment Production = The process of creating goods and services Signup and view all the answers

Match the following economic concepts with their definitions:

Value = Monetary worth of a good or service as determined by the market Utility = The capacity to be useful and provide satisfaction Wealth = The accumulation of tangible, scarce, useful, and transferable economic products Economic growth = The increase in a nation's total output of goods and services over time Signup and view all the answers

Match the following market types with their descriptions:

Factor market = A market where productive resources are bought and sold Product market = A market where producers sell goods and services to consumers Free enterprise economy = Market economy where privately owned businesses operate for profit with limited government intervention Economic interdependence = Reliance on one another to provide the goods and services that people consume Signup and view all the answers

Match the following production concepts with their definitions:

Productivity = Measure of output produced by given inputs in a specific period of time Division of labor = Work arranged so that individual workers do fewer tasks than before Specialization = Situation when a factor of production performs tasks more efficiently than others Human capital = Sum of skills, abilities, health, and motivation of people Signup and view all the answers

Match the following goods with their descriptions:

Durable good = Good that lasts for at least three years when used regularly Nondurable good = Good that wears out, is used up, or lasts for fewer than three years when used regularly Trade-offs = Alternate choices; alternative that must be given up when one choice is made rather than another Opportunity cost = Cost of the next best alternative use of money, time, or resources when one choice is made rather than another Signup and view all the answers

Match the following terms with their definitions:

Paradox of value = Situation in which some non-necessities have higher value than some necessities Economic interdependence = Reliance on one another to provide goods and services consumed Production possibilities frontier or curve = Diagram showing combinations of goods/services an economy can produce with full employment of resources Economic growth = Increase in a nation's total output of goods and services over time Signup and view all the answers

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Study Notes

Economics Basics

Value: The monetary worth of a good or service determined by the market.
Paradox of Value: Situation where non-necessities have a higher value than necessities.

Markets

Factor Market: A market where productive resources are bought and sold.
Product Market: A market where producers sell their goods and services to consumers.

Economic Growth and Productivity

Economic Growth: Increase in a nation's total output of goods and services over time.
Productivity: Measure of the amount of output produced by a given amount of inputs in a specific period of time.

Division of Labor and Specialization

Division of Labor: Work arranged so that individual workers do fewer tasks than before.
Specialization: Situation in which a factor of production performs tasks that it can do relatively more efficiently than others.

Human Capital and Economic Interdependence

Human Capital: Sum of the skills, abilities, health, and motivation of people.
Economic Interdependence: Reliance on one another to provide the goods and services that people consume.

Trade-offs and Opportunity Cost

Trade-offs: Alternate choices; alternative that must be given up when one choice is made rather than another.
Opportunity Cost: Cost of the next best alternative use of money, time, or resources when one choice is made rather than another.

Production Possibilities Frontier and Goods

Production Possibilities Frontier (Curve): Diagram representing various combinations of goods and/or services an economy can produce when all productive resources are fully employed.
Durable Good: Good that lasts for at least three years when used regularly.
Nondurable Good: Good that wears out, is used up, or lasts for fewer than three years when used regularly.

Economic Systems and Scarcity

Free Enterprise Economy: Market economy in which privately owned businesses have the freedom to operate for a profit with limited government intervention.
Scarcity: Condition that results from society not having enough resources to produce all the things people would like to have; fundamental economic problem.

Needs, Wants, and Factors of Production

Need: Basic requirement for survival that includes food, clothing, and shelter.
Want: Way of expressing a need; something we would like to have but is not necessary for survival.
Factors of Production: Resources required to produce things people would like to have; they include land, capital, labor, and entrepreneurs.
Land: Natural resources not created by humans; "gifts of nature".
Capital: Tools, equipment, machinery, and factories used in the production of goods and services.
Labor: People with all their efforts, abilities, and skills.
Entrepreneur: Risk-taker in search of profits who does something new with existing resources.

Other Key Terms

Production: Process of creating goods and services.
Gross Domestic Product (GDP): Dollar value of all final goods, services, and structures produced within a country's borders in a 12-month period.
Consumer Good: Item intended for final use by individuals.
Capital Good: Manufactured item used to produce other goods and services.
Service: Work that is performed for someone; includes haircuts, home repairs, and forms of entertainment.