Glossary Terms:

Production Possibilities Curve

Glossary terms from:
http://www.econedlink.org/e852


Assumptions

Beliefs or statements presupposed to be true.

Capital

Resources and goods made and used to produce other goods and services. Examples include buildings, machinery, tools and equipment. In the context of credit transactions, capital is one of the Three Cs of Credit. It is an indicator of how creditworthy a prospective borrower is likely to be as determined by the borrower's current financial assets and net worth.

Choice

Decision made or course of action taken when faced with a set of alternatives.

Consumption

Spending by households on goods and services. The process of buying and using goods and services.

Costs

An amount that must be paid or spent to buy or obtain something. The effort, loss or sacrifice necessary to achieve or obtain something.

Decision

A conclusion reached after considering alternatives and their results.

Economic Growth

An increase in real output as measured by real GDP or per capita real GDP.

Economics

The study of how people, firms and societies choose to allocate scarce resources with alternative uses.

Goods

Tangible objects that satisfy economic wants.

Microeconomics

The study of economics concerned with individual units of the economy such as households, firms and markets; with how prices and outputs are determined in those markets; and with how the price mechanism allocates resources and distributes income.

Money

Anything that is generally accepted as final payment for goods and services; serves as a medium of exchange, a store of value and a standard of value. Characteristics of money are portability, stability in value, uniformity, durability and acceptance.

Opportunity Cost

The second-best alternative (or the value of that alternative) that must be given up when scarce resources are used for one purpose instead of another.

Production

A process of manufacturing, growing, designing, or otherwise using productive resources to create goods or services used to to satisfy a want.

Resources

The basic kinds of resources used to produce goods and services: land or natural resources, human resources (including labor and entrepreneurship), and capital.

Scarcity

The condition that exists because human wants exceed the capacity of available resources to satisfy those wants; also a situation in which a resource has more than one valuable use. The problem of scarcity faces all individuals and organizations, including firms and government agencies.

Services

Activities performed by people, firms or government agencies to satisfy economic wants.

Work

Effort applied to achieve a purpose or result, often for pay; skills and knowledge put to use to get something done; employment at a job or in a position; occupation, profession, business, trade, craft, etc.