Goods

Physical articles that have been produced for sale or use.  Three examples are food, clothing, and cars.

Services

Work done by someone else for which a consumer, business, or government is willing to pay.  Three examples are teaching, gardening, and childcare. 

Factors of Production

Resources used to produce goods and services.  Economists define these resources as land, labor, and capital.

Entrepreneurship

The willingness and ability to take the risks involved in starting and managing a business.

Capital

The tools, machines, and buildings used to produce goods and services.

Productivity

A measure of the efficiency with which goods and services are produced.  Productivity is often stated as the quantity produced per person per hour. 

Opportunity Costs

The value of the next best alternative that is given up when making a choice.  This is the  measure of what you must give up to get what yo most want. 

Production Possibilities Frontier (PPF)

A simple model of an economy that shows all the combinations of two goods that can be produced with the resources and technoloty currently available.

Outputs

Goods and services produced using land, labor, and capital.

Production Equation

Land + Labor + Capital = goods and services

Entrepreneurs

Individuals assemble and create new goods and sercvices using land, labor, and capital.

Land

"Gifts of nature"- including air, soil, minerals, water, forests, plants, animals, birds, and fish.  They also include solar energy, wind and geothermal energy, and electromagnetic spectrum. 

Perpetual Energy

Natural resources such as sunlight and wind that are widely available and in no danger of being used up.

Renewable Resources

Resources, such as forests, fresh water, and fish that can ba replaced as they are used.  Some metals can be recycled to use again.

Nonrenewable Resources

Fossil fuels, such as oil, coal, and natural gas- one they are used, they are gone forever.

Labor

Time and effort people devote to producing goods and services in exchange for wages.

Human Capital

Knowledge and skill that people gain from education, on the job training, and other experiences- it's importance is almost impossible to overstate.

Correlation

Relationship between or connection between people, ideas, places, or items.

Financial Capital

Money that people can invest in stocks, bonds, real estate, or businesses to produce future wealth.

Physical Capital or Capital Goods

The tools, machines, and buildings used to produce goods and services.

Utility

The satisfaction or pleasure one gains from consuming a produc t or service or from taking an action.

Marginal Utility

Extra satisfaction or pleasure you will get from an increase of one additional unit of a good or service.

Negative Utility

The more we get of something, the marginal utility decreases.

Law of Diminishing Marginal Utility

As the quantity of a good consumed increased, themarginal utility of each additional unit decreases

Production Possibilities Curve

The sloping line on the PPF graph that represents the best the economy can do with its current factors of production.

Economic Efficiency

The result of using resources in a way that produces the maximum amount of goods and services.