| A | B |
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| economics | the study of choices that people make to satisfy their needs and wants |
| factors of production | resources that can be used to produce goods and services |
| natural resources | resources found on or in Earth or in the Earth's atmosphere |
| human resources | any human effort exerted during production. The effort can be either physical or intellectual |
| capital resources | the manufactured materials used to create products |
| entrepreneurship | the combination of organizational abilities and risk taking involved in starting a new business or introducing a new product |
| scarcity | the result of combining of limited economic resources and unlimited wants |
| trade-off | the sacrifice of one good in order to purchase or produce another |
| opportunity cost | the value lost by reject5ing one use of resources in favor of another |
| production possibilities curve | a graphic representation showing akll of the possible combinations of two goods or services that can be produced in a stated period, assuming that the amount of available resources and technology will not change during the period, and that all of the natural, human and capital resources involved are being used in the most efficient manner possible |
| exchange | the process by which producers and consumers agree to provide one type of item in return for another |
| credit | a form of exchange that allows consumers to use items with a promise of repayment over a specified time |
| What is the difference between microeconomics and macroeconomics? | Micro--the study of specific economic actors; macro--study of entire economies |
| Why is scarcity important in economics? | it forces people to decide how to use resources effectively |
| What three production issues must an economic system address? | what, how and for whom to produce |
| How can division of labor and specialization increase productivity? | workers do a few tasks repeatedly and become experts at those tasks and do them faster |
| What are the two assumptions on which the production possibilities curve is based? | (1) resources and technology will not change during the period being studied (2) all resources are being used as efficiently as possible |
| What are the benefits of interdependence? | (1) countries don't have to produce all the goods they consume (2) they can specialize in the production of certain goods while trading for others |
| Economist | A person who studies economic choices |
| Economic Resources | the things people use to make or obtain what they need or want |
| allocate | distribute resources in order to satisfy the greatest number of needs and wants |
| productivity | the level of output resulting from a given level of input |
| efficiency | use of the smallest amount of resources to produce the greatest amount of input |
| Division of Labor | assigning a small number of tasks to each worker |
| Specialization | employees gain expertise in their tasks and thus they can work faster and create more products/goods |
| Shortcuts | products may be able to be made faster |
| Mechanization | some employees’ jobs may be replaced by machines |
| Exchange | process whereby producers and consumers agree to provide one type of item in return for another |
| barter, money, credit | Three forms of exchange |
| self-sufficiency | when people/societies can fulfill all of their needs without outside assistance |
| interdependence | when events or developments in one region of the world, influence events or developments in other regions |
