Economics Vocabulary Chapter 1 -14 Factors of Production

Human Resources – any human effort exerted during production. The effort can be either physical or intellectual.

Capital Resources – manufactured materials used to create products. This includes capital goods and the money used to purchase them.

Natural Resources – items provided by nature that can be used to produce goods and to provide services. Can be found on or in Earth or in the Earth’s atmosphere.

Economics Chapter 1-2Factors of Production

Entrepreneurship – the combination of organizational abilities and risk taking involved in starting a new business or introducing a new product.Entrepreneur – a person who attempts to start a new business or introduce a new product – risking economic failure in return for the possibility of financial gain.

Economics Chapter 1-2Capital Goods – manufactured resources that are used in making finished productsConsumer goods – the goods and services that people buy.

Economics Chapter 1-2Technology – the use of technical knowledge and methods to create new products or make existing products more efficiently.

Economics Chapter 1 Section 2 Scarcity is a condition caused by the combination of limited economic resources and unlimited human wants

Economics Chapter 1-2Allocate – to distribute resources in order to satisfy the greatest number of needs and wants.

Economics Chapter 1-2Productivity – is the level of output that results from a given level of input. Efficiency is the use of the

smallest amount of resources to produce the greatest amount of output.

Economics Chapter 1-2Division of labor assigning a small number of tasks to each worker.Specialization – the focus on one activity, usually determined by who produces toe fastest or greatest number

Economics Chapter 1-2 Scarcity the three basic economic question that individuals, businesses, and societies must address when deciding how best to allocate scarce resources

What to produce How to produce for whom to produce

Economics Vocabulary Chapter 1 Section 3

opportunity cost – the value of the next best alternative that is given up to obtain the preferred item

Economics Vocabulary Chapter 1 Section 3

Trade-off/Alternative – choosing among alternative uses for available resourcesCriteria – What is the goal

Economics Vocabulary Chapter 1 Section 4exchange – producers and consumers agree to provide one type of item on return for anotherBarter – direct trade of one set of good for another money – type of exchange that is used instead of bartering (always trading the same thing)Credit – Promise to Pay money for goods or services

Economics Vocabulary Chapter 1 Section 4

3 Types of ExchangesBarter – direct trade of one set of good for another money – type of exchange that is used instead of bartering (always trading the same thing) (indirect)Credit – Promise to Pay money for goods or services (indirect)