SECTION 3
Basic Economic Language
Goods and Services
All things that people want can be classified as either tangible
or intangible. Something that can be felt by touch is a tangible
item, such as a book or a car. Something that cannot be felt by
touch is intangible. Friendship is intangible, as are knowledge
and experience.
A good is anything that satisfies a person’s wants or brings
satisfaction.
A good can also bring a person satisfaction or happiness, or
utility. The term disutility is used to describe something that
brings dissatisfaction or unhappiness.
Another example of a tangible good is a service. Services are
tasks that you pay other people—such as doctors, hair-stylists,
or car mechanics—to perform for you.
Resources
Goods and services cannot be produced without resources.
The resources used to produce goods and services fall into the
following categories: land, labor, capital, and entrepreneurship.
• Land includes all the natural resources found in nature. An
acre of land, mineral deposits, and water in a stream are all
considered land.
• Labor refers to the physical and mental talents that people
contribute to the production of goods and services.
• Capital is the produced goods that can be used as resources
for further production. Factories, machines, and farm
tractors are capital.
• Entrepreneurship is the special talent that some people
have for searching out and taking advantage of new
business opportunities and for developing new products and
new ways of doing things.
Why are labor and entrepreneurship different categories of
resources? Entrepreneurship is different from labor in that the
ordinary mental and physical talents of people are considered
labor. The special talents and methods unique to an individual
describe entrepreneurship.
Applying the Principles
Resources
Economics - CHAPTER 1, SECTION 3
Use the following key to label each of the resources in questions 24-39 as land, labor, capital, or
entrepreneurship. If a resource is land, identify it as either renewable or nonrenewable. If a resource is
a capital good, identify it as either physical or human. (Hint: Physical capital is a tangible, human-made
resource-such as tools or machinery-used to produce other goods and services. Human capital is the
knowledge and skills a worker gains through education and experience. )
1. coal
Ld-n
2. telephone
C-p
3. natural gas
Ld-n
4. computer
C-p
5. truck driver
Lbr
6. accountant
Lbr
7. forklift
C-p
8. oak trees
Ld-r
9. Corn
Ld-r
10. education
C-h
11. Bill Gates
E
12. cotton
Ld-r
13. gold
Ld-n
14. hammer
C-p
15. Henry Ford
E
16. lawyer
Lbr
For the rest of class…
•
Use a textbook to complete Chapter 2, Section 1.
•
•
Do NOT do the section on the Index of Economic Freedom –
we will do this part on Thursday. Skip this and move on to the
comparison of Adam Smith and Karl Marx.
When you have finished the textbook notes, then you have
the rest of the class period to complete your “My Career”
assignment. It is due by the end of the period.
• When you come in on Thursday, we will start
class with a quiz on Chapter 1 and Chapter 2,
Section 1. The quiz will NOT be open-note so
please be prepared.