Unit 8 Vocabulary- Please use the

back of the book to define!!

1.Market 6. Division of labor
2.Factor market 7. Economic
interdependence
3.Product market
8. Sector
4.Productivity 9. Consume
5.Specialization 10. Input
Economic Systems and Macroeconomics: Crash
Course Economics #3
 Unit 8- Economics
Factors of Production:

What goes into your pencil?

 Factors of Production
• Land
• Labor
• Capital
 Land
• Natural resources Anything not made by
human beings
– Trees
– Cotton
– Water
– Iron
 Labor
• Human resources anything that
someone does (mental or physical) to
produce a good or a service
– Picking crops
– Designing a microchip
– Bringing a meal to a table
 Land + Labor = Wealth
• Wealth Value (exchange value or just
satisfaction) that comes from human
beings doing something with natural
resources
 Examples of wealth
• Can be for sale, or for personal use
– Turning trees into pencils
– Taking a pencil and drawing something
 Capital
• When wealth is used to create more
wealth
• Goods used to make other goods and
services
– Machines, buildings, and tools can be used to
make other things
Capital
 Capital Goods vs. Consumer
Goods
Capital Goods Consumer goods
• Used to make other • Final products that
goods can be sold or used
directly
 Costs
• Fixed
• Variable
• Total
• Marginal
 Fixed
• Stay the same no matter how much is
produced
– The rent on a factory space
– Property taxes
 Variable Costs
• Costs that change depending on how
much of something you make
• The more you make, the more these costs
go up
– More paper = more trees
 Total Costs
• Fixed + Variable
 Marginal Costs
• The additional cost of producing one more
unit of output
– 3000 pencils= $150
– 3001 pencils = $150.05
– Marginal cost = $.05
What is Profit?
 Profit
• Price that something sells for – Total
Costs
• The amount of money left over after all
costs are taken out
 Cost-Benefit Analysis
• A process of deciding whether or not the
benefits of producing something outweigh
the costs