economic-principles Terms
Asset
Any item possessing value owned by an individual, business, or government.
Capital (Factor of Production)
As a factor of production the term refers not just to money, but all types of property, such as machinery and tools, used in producing a good or service.
Entrepreneurship
One of the human inputs in the production process. The term refers to the creativity and initiative involved in starting a business or developing new production or distribution processes.
Factors Of Production
All of the resources used to produce goods and services—land, labor, capital, technology, and entrepreneurship.
Gross Domestic Product (GDP)
The total market value of all goods and service produced within a country during a specified period.
Income
The money received in exchange for labor; the revenues earned through some business activity; the proceeds from an investment.
Labor (Factor of Production)
As a factor of production this term refer to the work or human effort invested in the production of a good or service.
Land (Factor of Production)
As a factor of production this term refers to all natural resources, such as water, game, timber, and minerals.
Lorenz Curve
A graph illustrating income distribution.
Market Share
The percentage of the market for a particular good controlled by a company. In 2009, General Motors sold more cars in the United States than any other manufacturer. Its market share was 22. 3%. Toyota ranks second in the US with 16.2% market share. (Source)
National Income
The total income from all sources earned in a nation over specified period of time.
Opportunity Costs
The value of the thing sacrificed in making an economic choice. When a resource is spent in a particular way, the opportunity cost is the next best alternative for that spent resource.
Per Capita Income
The national income divided by the total population.
Personal Distribution of Income
A measurement of how income is distributed throughout the population.
Production Possibilities Curve
A graph illustrating the levels of production of various goods and services through various allocations of resources.
Productivity
A measurement of how efficiently resources are being utilized. Productivity measures the value of our outputs for every unit of input—that is, how much production is generated for every unit of labor or capital that invested.
Profit
The earnings from an investment or business after subtracting expenses and costs.
Principle of Scarcity
A fundamental economic concept asserting that as there will never be adequate resources to meet the unlimited wants and needs of individuals and societies. Economics is the largely the study of how we deal with scarcity. It examines how nations and individuals prioritize and allocate their limited income, time, and resources.
Technology (Factor of Production)
As a factor of production the term refers to the body of knowledge or science that informs or improves a production process.
Tradeoff
The sacrifice necessary in every economic decision. In every use of resources, another use for those resources is sacrificed.