Supply & Demand - Faculty.utep.edu

SillIly GuideSECT)Basic Economic ConceptsAn economic product is a good or service that is useful,relatively scarce, and exchangeable.Reading StrategyGraphic Organizer As you read the section, describethree different transactions that could take place inthe factor market. Use a web like the one below tohelp you organize your answer.Factor markettE~evKey'hnnseconomic product, good, consumer good, capitalgood, service, value, paradox of value, utility, wealth,market, factor market, product market, economicgrowth, productivity, division of labor, specialization,human capital, economic interdependenceObjectivesAfter studying this section, you will be able to:1. Explain the relationship among scarcity, value,utility, and wealth.2. Understand the circular flow of economic activity.Applying Economic ConceptsSpecialization Read to discover how specializationincreases production.IjOn SpecializationTo take an example, ... One man draws au t thewire, another straightens it, a third cuts it, a fourthpoints it, a fifth grinds it atthe top for receiving thehead; to make the headrequires two or threedistinct operations;to put it on, is apeculiar business, towhiten the pins isanother; it is even atrade by itself to putthem into the paper;and lthe making on apin is, in this manner,divided into about eight­een distinct operations.12-Adam 5rtllth. The Wealth ofl'lat;OJl., 1776Adam Smithconomics, like any other social science, hasits own vocabulary. To understand economics,a review of some key terms is necessary.Fortunately, most economic terms are widely used,and many will already be familiar to you.oods, Services, and ConsumersIEconomics is concerned with economicproducts-goods and services that are useful,relatively scarce, and transferable to others.Economic products are scarce in an economicsense. That is, one cannot get enough to satisryindividual wants and needs. Because of these characteristics,economic products command a price.GoodsThe first type of economic product is a goodanitem that is economically useful or satisfiesan economic want, such as a book, car, or compactdisc player. A consumer good is intendedfor final use by individuals. When manufacturedgoods are used to produce other goods and services,they are called capital goods. An example