The Significant Seven Economic Concepts

The Significant Seven Economic Concepts Students Should Know

Goods and Services:
Goods are physically tangible things such as food, shoes, cars and houses. Services are physically intangible things such as medical care, haircuts, and education. Goods and services must be produced.

Productive Resources:
Productive resources are the items necessary to make the goods and services that people want. They include: Human Resources, Natural Resources, Capital Resources.

Scarcity:
Scarcity is the condition of not being able to have all of the goods and services one wants. It results from the imbalance between relatively unlimited wants and the limited productive resources available for satisfying those wants. The price of a good or service reflects its scarcity.

Opportunity Cost:
Opportunity cost is value of the best alternative given up when making a choice. There is an opportunity cost to every choice.

Specialization:
Specialization occurs when people produce a narrower range of goods and services that they consume. Specialization characterizes the actions of individuals, business firms, cities, regions, and countries.

Exchange:
Exchange is trading goods and services with people for other goods and services or for money. The simplest form of exchange is barter - the direct trading of goods or services. Voluntary exchange gives people a broader range of choices in buying goods and services. Voluntary exchange is a win-win situation - since both parties expect to gain.

Interdependence:
Interdependence results as people and nations depend on one another to provide goods and services. Greater specialization and exchange lead to greater interdependence.

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