Wants
desires for goods and services
Resources
factors used to produce goods and services
The economic problem
unlimited wants exceeding finite resources
Scarcity
a situation where there is not enough to satisfy everyone's wants
Economic good
a product which requires resources to produce it and therefore has an opportunity cost
Free good
a product which does not require any resources to make it and so does not have an opportunity cost
Capital/Capital goods
human-made goods used in production
Consumer goods
goods and services purchased by households for their own satisfaction
Entrepreneur
a person who bears the risks and makes the key decisions in a business
Occupationally mobile
capable of changing use
Geographically mobile
capable of moving from one location to another location
Mobility of labour
the ability of labour to change where it works or in which occupation
Mobility of capital
the ability to change where capital is used or in which occupation
Mobility of enterprise
the ability to change where enterprise is used or in which occupation
Labour force
people in work and those actively seeking work
Productivity
the output per factor of production in an hour
Output
goods and services produced by the factors of production
Investment
spending on capital goods
Gross investment
total spending on capital goods
Depreciation (capital consumption)
the value of capital goods that have worn out or become obsolete
Net investment
gross investment minus depreciation
Negative net investment
a reduction in the number of capital goods caused by some obsolete and worn-out capital goods not being replaced
Opportunity cost
the next best alternative forgone while making an economic decision Production possibility curve- a curve that shows the maximum output of two types of products and combination of those products that can be produced with existing resources and technology