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Economic Terms

Economic Terms. There are some basic economic terms that we need to be aware of before we can learn about the economy. Wants. Things we desire to have. Goods. Physical products. Services. Products you can’t touch. Scarcity. The result of an inability to satisfy all of everyone’s wants

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Economic Terms

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  1. Economic Terms

  2. There are some basic economic terms that we need to be aware of before we can learn about the economy.

  3. Wants Things we desire to have

  4. Goods Physical products

  5. Services Products you can’t touch

  6. Scarcity The result of an inability to satisfy all of everyone’s wants EVERYTHING IS SCARCE

  7. Choices • We can’t have everything we want • Therefore, we must choose what we get

  8. Opportunity Costs The best alternative given up when making a decision

  9. Rationing Device A means for deciding who gets what portion of the available goods and services

  10. Economics Studies the choices of people trying to satisfy their wants in a world of scarcity

  11. Exchanging Giving one thing for another (e.g. $ for food)

  12. Market Whenever and wherever people voluntarily make exchanges with one another

  13. Economic Concepts

  14. These concepts are the basis for our study of the economy

  15. Trade-offs Giving up some of one thing in order to get more of another

  16. Unintended Effects • Taking action to solve one problem results in something unrelated to occur. • Example: raising the price on a pair of shoes to earn more money and ending up selling fewer shoes and actually losing money

  17. Global Economy Economic actions taken anywhere in the world may affect an individual’s standard of living

  18. Microeconomics Studies the individual or a single business in the economy

  19. Macroeconomics Studies the economy as a whole

  20. Factors of Production • Natural resources • Human resources • Capital • Entrepeneurship

  21. Economic Questions • What goods will be produced? • How will the goods be produced? • For whom will the goods be produced?

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