Economics Vocabulary

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Economics

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The study of how people choose to use limited resources to satisfy their unlimited wants. The three economic questions are: How a group of people make decisions about what to make, how to make it, and for whom to make it.

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Human Resources/Capital

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The knowledge and skills (education) that allow workers to produce goods and services and earn a salary. Example: The knowledge and skills needed to become a doctor, lawyer, teacher, or car mechanic.

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Goods

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Tangible (touchable) objects that satisfy economic wants. Items that a person may want or need to have.

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Services

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Activities performed by people to satisfy economic wants. Examples: Restaurants provide the service of preparing food for people. Teachers provide the service of educating students.

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Producer

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Someone who uses resources to make a good or service. Examples: A car company, such as Ford, uses raw materials to create automobiles.

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Consumer

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Someone who buys or trades a good or service. Whenever we buy a product or pay for a service, we are being a consumer.

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Standard of Living

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A person’s level of comfort. Determined by the amount of goods, services, and luxuries available to a person. Countries with a higher GDP usually have a higher standard of living.

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Scarcity

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The condition that exists because human wants go beyond the available resources required to satisfy those wants. When there isn’t enough of something because humans want more than they can have.

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Traditional Economy

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An economic system where social roles and culture decide what goods and services will be produced, how they will be produced, and for whom. People follow traditions in their way of living.

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Command Economy

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An economic system where the government decides what goods and services will be produced, how they will be produced, and for whom. The government has full control over the economy.