Economic Terms

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

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Wants

• Things we desire to have

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Goods
Physical products
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Services
Products you cant touch
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Scarcity
The result of an inability to satisfy all of
everyones wants EVERYTHING IS SCARCE
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Choices

• We cant have everything we want
• Therefore, we must choose what we get

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Opportunity Costs
The best alternative given up when making a
decision
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Rationing Device

• A means for deciding who gets what portion of
  the available goods and services

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Economics
Studies the choices of people trying to satisfy
their wants in a world of scarcity
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Exchanging
Giving one thing for another (e.g. for food)
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Market
Whenever and wherever people voluntarily make
exchanges with one another
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Economic Concepts
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These concepts are the basis for our study of the
economy
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Trade-offs
Giving up some of one thing in order to get more
of another
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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

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Global Economy

• Economic actions taken anywhere in the world may
  affect an individuals standard of living

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Microeconomics
Studies the individual or a single business in
the economy
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Macroeconomics
Studies the economy as a whole
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Factors of Production

• Natural resources
• Human resources
• Capital
• Entrepeneurship

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Economic Questions

• What goods will be produced?
• How will the goods be produced?
• For whom will the goods be produced?