Important words

• Land

  Natural resource
• labour

  Working people
• capital

  human made resources used for the future (tools)
• enterprise

  organization and combing all necessary factors
• production

  total amount produces
• Entrepreneurs

  Made money, with a business they made
• innovative

  Makes what people want
• opportunity cost

  foregoing your second best option
• foregoing

  giving up on something
• relative scarcity

  wants are greater that the quantity
• dynamic

  moment which is uncertain, unexplained and irregular
• consumer demand

  shows what people like and what you should specialize in
• complementary wants

  have to have two or more things for it to work (CD & CD player)
• competitive wants

  price of something goes up making another product more popular
• collective wants

  things a group of people want (schools, roads )
• changeable wants

  a want that can change over time
• recurrent want

  something you want over and over again
• ceteris paribus

  an assumption that targets a certain factor
• Production possibility frontier (PPF/PPC)

  comparing two goods, both products have perfect mobility
• perfect mobility

  made of the same materials but make different things
• Marginal thinking

  Comparing options to see which has the better outcome
• incentive

  Encourages you to do something, like a reward
• resources

  anything that can be used to satisfy human wants, it has to be known, be accessible and be capable
• Collective wants are things desired by the whole community as distinct from individuals
• Wants are things we desire because they give us satisfaction
• Leakage/withdrawal is the general term given to any income not spent on consumption and therefore ‘lost’ for a time to the circular flow
• The economic problem is the problem of deciding how to satisfy unlimited wants with limited resources
• The market is where consumers and producers meet to exchange goods and services
• Resources are also known as Factors of production
• Scarcity is insufficiency relative to wants
• Consumer sovereignty is when consumers influence what to produce
• Changeable wants are wants that change in response to fashion or season
• Producer decides how to produce goods and services
• Opportunity cost is the opportunity foregone when you choose one alternative over another
• Free good is something that is not scarce, and enough is available for all possible users
• Economics is sometimes known as the study of choice
• Complementary good are goods that go together like a car & petrol
• Insatiable means incapable of being satisfied
• Government is the sector of the circular flow into which taxation goes as a leakage
• Rent is the form in which payment is made to the owners of land when it is made available to producers