Basic Economics Concepts

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Economics

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The study of how people, businesses, and governments make choices to use limited resources.

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Scarcity

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The basic economic problem: resources are limited, but wants are unlimited.

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Needs

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Things necessary for survival (food, water, shelter, clothing).

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Wants

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Things people desire but don’t need to survive.

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Goods

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Physical objects that can be bought or sold (ex: clothes, food, cars).

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Services

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Actions or activities done for others (ex: teaching, haircuts, banking).

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Factors of Production

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The resources used to make goods and services: land, labor, capital, and entrepreneurship.

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Entrepreneur

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A person who takes risks to start a business and combine resources in new ways.

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Economic System

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The way a society organizes the production and distribution of goods and services.

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Traditional Economy

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An economy based on customs, traditions, and beliefs, often relying on farming or hunting.