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Chapter 1 Section 2 Goods, Services, and Consumers • Goods are items that are economically useful or satisfy an economic want. They are tangible and can be classified as consumer/capital and durable/nondurable • Services are work performed for someone and are intangible • Consumers use goods and services to satisfy wants and needs. Tangible/Intangible-Durable/NonDurable: Consume/Capital Goods • Tangible: you can touch • Intangible: you can’t touch-services • Durable Goods-Last more than 3yrs. EX: jewelry, appliances, cars, ect. • Non-Durable Goods-last less than 3yrs.Ex: food, clothing, toothpaste, soap, ect. • Consumer Goods: for self-use • Capital Goods: used to make $$ Value, Utility and Wealth • Value is worth expressed in dollars and cents. Scarcity by itself is not enough to create value. For something to have value, it must also have utility. • Paradox of Value Example: diamonds & water • Utility is a good’s or service’s capacity to provide satisfaction, which varies with the needs and wants of each person. • Wealth is the accumulation of goods that are tangible, scarce, useful, and transferable to another person. Wealth does not include services. Circular Flow of Economic Activity • Markets are locations/mechanisms for buyers and sellers to trade. • Markets are classified as local, regional, national, global, and cyberspace. • A factor market is where you earn your incomes. • A product market is where you spend your income, centering on goods and services. Productivity and Economic Growth • Productivity is a measure of the amount of output produced by the amount of inputs within a certain time. Productivity increases with efficient use of scarce resources. • Specialization and division of labor may improve productivity because they lead to more proficiency and greater economic interdependence • When people’s skills, abilities, health, and motivation advance, and they have a clean and safe work environment, productivity increases. • Economic growth depends on high productivity; it may be affected by its interdependence.