Herschel Economics

Definitions

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Goods and Services

Goods are objects we can hold that satisfy people’s economics wants. Services are actions, such as haircuts and car repair, which also satisfy people’s economic wants. It's important to remember that people must work to produce goods and services because they don’t appear magically on store shelves. This work produces income that people can spend on their wants and needs.

Goods:  Do I want or need it? Can I buy it?

Services:  Would I pay someone to do this for me?

Producers and Consumers

Producers are people who make goods or provide services.  Consumers are people who buy goods and services.

Productive Resources

Productive resources are used to produce goods and services. They are divided into three groups: natural resources, human resources, and capital resources.

Scarcity

Because productive resources are limited, there will never be enough goods and services to give everyone what they want. This makes scarcity. Scarcity means that there are not enough goods and services for everyone to have all that he or she wants.

Trade and Money
 
Everyone produces the best product they can and then trades (exchanges) with others to get many of the goods and services (economic wants) they consume. Money is anything accepted as final payment for goods and services. Trade without money is called barter.

Opportunity Cost

Because of scarcity, any time a choice is made there are other choices that are not chosen. There is always one best alternative that is not chosen. The value of this best alternative is the opportunity cost. Both producers and consumers have opportunity costs when making decisions.

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