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Economic Definition

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Economics
Important Terms & Definitions

Scarcity - Situation where limited resources available unable to satisfy unlimited human wants

Opportunity Cost (OC) - Cost of any activity measured in terms of next best alternative forgone

Production Possibility Curve (PPF) - Shows all different maximum attainable combinations of goods & services produced when all available resources are used efficiently at given state of technology

Law of Increasing Opportunity Cost - As more of a good is produced, more of another good has to be sacrificed in production

Factors of production - Economic resources: land, capital, labor, and entrepreneurial ability.

Consumer goods - Products and services that satisfy human wants directly.

Capital goods (See capital.) - “Human-made resources (buildings, machinery, and equipment) used to produce goods and services; goods that do not directly satisfy human wants; also called capital goods.”

Macroeconomics - The part of economics concerned with the economy as a whole; with such major aggregates as the household, business, and government sectors; and with measures of the total economy

Microeconomics - The part of economics concerned with such individual units as industries, firms, and households and with individual markets, specific goods and services, and product and resource prices.

Economic resources -The land, labor, capital, and entrepreneurial ability that are used in the production of goods and services; productive agents; factors of production.

Land - Natural resources ("free gifts of nature") used to produce goods and services.

Labor - People’s physical and mental talents and efforts that are used to help produce goods and services.

Capital - Human-made resources (buildings, machinery, and equipment) used to produce goods and services; goods that do not directly satisfy human wants; also

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