Definitions

Economics:
Economics is the study of the principles governing the allocation of scarce means among competing ends when the object of the allocation is to maximize the attainment of those ends.

Scarce:
Things are scarce when human wants exceed the means to satisfy those wants.

Factors of production:
Labor:
All of man’s physical and mental talents that are used in the production of goods and services.

Wages:
Payment to labor, price of labor.

Land:
All natural resources.

Rent:
Payment to land.

Capital:
Man-made aids to production which enhances / increases production.

Interest:
Payment to capital.

Entrepreneurial Talent:
The resource that combines other factors of production in the capacity of a decision-maker, risk-taker, and innovator.

Profit:
Payment to entrepreneurial talent.

Economic Behavior:
Production:
Creation of utility.

Utility:
Usefulness of something.

Consumption:
Destruction of utility, reduces want satisfying capacity.

Exchange:
The transfer of property rights.

Property rights:
Rights held by person who is deemed owner of something to do whatever seems fit to dispose of it.

Specialization:
When people produce more of a commodity than they consume or plan to consume. Requires unequal endowment of resources and trading possibilities.

Opportunity cost:
The opportunity cost of one good is that amount of other goods that must be sacrificed in order to get an additional unit of the good in question.

Sunk cost:
A historical cost no longer relevant to the decision at hand. Sunk costs are sunk.