1. Economics
Chapter 1
Section 2

2. Goods, Services and Consumers
Economic products- goods and services that are useful, relatively scarce, and transferable to others
Good- an item that is economically useful, or satisfies an economic want
Consumer good- is intended for final use by individuals
Capital goods- manufactured goods that are used to produce other goods and services

3. Goods, Services and Consumers
Any good that lasts 3 yrs. Or more is called a durable good
Service- work that is performed for someone (intangible)
Consumer- a person who uses a goods and services to satisfy wants and needs

4. Value, Utility, and Wealth
Value- refers to a worth that can be expressed in dollars and cents
Paradox of value- the situation were some necessities, such as water, have little monetary value, whereas some non-necessities (diamonds) have a much higher value
Scarcity is required for value

5. Value, Utility, and Wealth
Utility- the capacity to be useful and provide satisfaction
Utility of a good or service may vary from one person to another
For something to have value it must be scarce and have utility- this is the solution to the paradox of value

6. Value, Utility, and Wealth
Wealth- the accumulation of those products that are tangible, scarce, useful, and transferable from one person to another
A nations wealth is comprised of all items- natural resources, factories, stores, houses, motels…
Services are not counted as wealth because they are intangible, but services are useful in creating wealth

7. The Circular Flow of Economic Activity
Market- a location or other mechanism that allows buyers and sellers to exchange a certain economic product
Factor Markets- the markets where productive resources are bought and sold, this is where entrepreneurs hire workers, acquire land for rent, and borrow money for interest. You go to work and sell your labor to an employer

8. The Circular Flow of Economic Activity
Product markets- markets where producers sell their goods and services to consumers- the money individuals receive in factor markets returns to businesses in product markets- figure 1.3

9. Productivity and Economic Growth
Economic Growth- occurs when a nation’s total output of goods and services increases over time
Productivity- a measure of the amount of output produced by a given amount of inputs in a specific period of time. Often discussed in terms of labor, but it applies to all factors of production

10. Division of Labor and Specialization
Division of labor- takes place when work is arranged so that individual workers do fewer tasks then before
Assembly line
Specialization- when factors of production perform tasks that they can do relatively more efficiently than others. Also regional specialization- Idaho potatoes

11. Investing in Human capital
Human Capital- the sum of the skills, abilities, health and motivation of people
Gov’t can invest by providing education and health care
Business can invest in training
Individuals invest in themselves

12. Economic Interdependence
Economic interdependence- we rely on others, and others rely on us, to provide the goods and services that we consume
Pro basketball player strike will effect many people