Basic Economic Concepts Chapter 1, Section 2 Basic Economic Concepts

Goods, Services, and Consumers Goods: item that is economically useful, or satisfies an econ want

Types of goods Consumer good- intended for individuals Capital good- manufac. goods that are used to prod other goods and services Ex: oven, computer, robot

Services Work performed for someone

consumer A person who uses goods and services to satisfy wants and needs We indulge in consumption

Value, Utility, and Wealth Value: can be expressed in dollars and cents Paradox of value: a situation where some necess, such as water, have little money value. Non-necess, such as diamonds, have a much higher value scarcity itself is not enough to create value

Utility For something to have value, must also have utility- useful and provide satisfac May vary fr one person to another Therefore: value=scarcity+utility Example: diamonds, oil, fine wine

Wealth Accumulation of those products that are tangible, scarce, useful, and transferable from one person to another. Nation’s wealth is all of the above Includes goods but not services What Adam Smith thought

Productivity and Economic Growth Productivity: a measure of the amount of output produced by a given amount of inputs in a specific period of time Division of labor and specialization Investing in human capital (pg. 16)- the sum of the skills, abilities, motivation, and health of the ppl