Economics Key Terms

Economics The study of how things are bought and sold.

Microeconomics Economic decisions that affect individuals in an economy.

Macroeconomics Economic decisions that affect the economy of a country.

1.Pepsi introduces a new flavor of soda. 2.Russia prints more money causing inflation. 3.Red Cross needs more blood desperately. 4.Microsoft still tied up in legal battle. 5.Congress to tackle social security. 6.Walmart opens 100 new stores. 7.China tries to limit the amount of births. 8.Ford releases new version of the Mustang. 9.U.S. trade deficit widens. Micro or Macro Issues?

Scarcity The fact that we have unlimited wants and limited resources (never enough).

Opportunity Cost What you must give up to obtain something else.

Goods Any item that can be bought or sold.

Services Any action for which a person is paid.

Consumers People who buy things.

Producers People who make and sell things.

Capital Resources Tools or equipment used to make goods and services.

Human Resources People working to make goods and provide services.

Natural Resources Materials found in nature that can be used to make goods or services.

Opportunity Cost

Goods and Services G G G G G G S S S S S S S S S S

Economic Resources Coal Cow Oil Diamonds Store Clerk Janitor Carpenter Artist Oven Telephone Tractor Factory

Economic Resources Natural Resources –lemons, water, sugar, ice, wood Human Resources –lemonade Seller Capital Resources –cups, spoons, pitcher, chair, stand

Supply The number of items ready for sale.

Demand The number of people that want to buy something.

Equilibrium Point Condition where the price and quantity a seller wants matches the price and quantity a buyer wants.

Surplus When supply is greater than demand. (extra)

Shortage When demand is greater than supply. (not enough)