2. 1.1
Simply put, economics is the study of the choices
that people make to satisfy their needs and wants.
Economist: person who studies economics
Microeconomics: study of choices made by
economic actors such as households, companies,
and individual markets.
Macroeconomics: studies the behavior of entire
economies.
Consumers: people who decide to buy things
Producers: People who make things
Goods: physical objects that can be purchased
Services: actions or activities performed for a fee.
3. 1.1
Factors of production: resources that can be used
to produce goods
Natural resources: nature helps to produce goods
and provide services
Human resources: when humans put in effort
during production
Capital resources: the manufactured materials
used to create products.
Capital goods: buildings, structures, machinery,
and tools used in the production.
Entrepreneurship: organizational abilities mixed
with risk taking involved in starting a new business
or selling a new product.
4. 1.1
To develop a new mix of the other factors of
production, creating something of value.
Entrepreneur – a person who attempts to
start a new business or produce a new
product.
Ex. Michael Dell, helped make computers
more affordable by starting Dell, which sold
their computers by phone or online. They are
now the world’s top direct seller of computers.
5. 1.2
Itforces people to make decisions about
how to use resources effectively.
Scarcity: the combination of limited
resources and unlimited wants.
6. 1.2
What to produce: sometimes the producer
must choose which need is more urgent.
How to produce: managing your options of
ways of production, people or machine?
For whom to produce: the way the product
is built depends on who is using it.
Allocate: another word for distribute
7. 1.2
To determine if resources are being used
wisely.
Productivity: the level of output that results
from a given level of input.
Efficiency: use of the smallest amount of
resources to make the biggest amount of
output.
Division of labor: assigning a small amount
of tasks to each worker.
Specialization: the focus on one activity
8. Sacrifice is an important element of
economic choice because once you use
one resource to produce, you can’t use
that one resource again. (unless its
renewable)
Trade-off: another term for sacrifice
Opportunity cost: the value of the next best
alternative that is given up to obtain the
preferred item.
9. 1. the amount of available resources and
technology will NOT change during the
period being studied.
2. all of the natural, human and capital
resources are being used in the most
efficient manner possible.
Production possibilities curve: shows all of
the possible combinations of two goods or
services that can be produced within a
stated time period.
10. Advances in technology
Resource availability
If the curve moves right, technology
improvements have been made or there
are more resources available
Curve moves left, less resources