Economics Vocabulary

Economics Vocabulary

Open Ended

What is a choice? What are some examples of choices we make?

The Definition of Economics

The study of how individuals and societies choose to allocate (use) scarce resources

Opportunity Cost

What you give up whenever you make a choice. AKA "the second best option"

Individuals consider the value of what is being given up when making a choice.

"An opportunity cost is an opportunity lost"

Multiple Choice

Opportunity Cost Example:

Bob has two hours of time after school before soccer practice. He has two things he could do during those hours:

A) Play his new PS5

B) Spend it studying for his math test tomorrow

Which should he pick???

• Spend it playing his new PS5

• Study for his math test

Open Ended

What does Bob give up if he chooses to play his PS5?

Open Ended

What does Bob give up if he chooses to study for his math test?

Resources

The things (factors of production) that are used when producing goods and services

Multiple Select

Which of the following are things you think we use when we create goods and services?

• land

• labor

• machines

• tools

• new businesses

The 4 Factors of Production

• Natural: Land, raw resources (water, plants, animals, etc.)

• Human: People (Labor)

• Capitol: Machinery, Tools, and Buildings used to produce

• Entrepreneurship: new business which combines other factors to make a profit.

Production

Production is the combining of resources/factors of production (natural, human, capitol, and entrepreneurship) to make goods pr provide services.

What goods and services are produced is determined by what resources are available and consumer preferences.

Consumption

This is the using of goods and services. Consumer preferences and price determine what is purchased and consumed.

Open Ended

What does it mean when something is scarce?

The Scarcity Problem

• We have unlimited wants.... but our resources are limited. We do not have all the resources to produce everything we want.

• Scarcity forces consumers, producers, and governments to make some difficult choices.

• Example: Nearly every teenager wants a PS5 right now. The producers only have enough resources to put just a few on the market right now.