Economics: Scarcity, Needs, and Wants

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

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

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

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

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

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

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

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

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

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