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LAW OF COMPARATIVE ADVANTAGE: A basic principle that states every nation has a production activity that incurs a lower opportunity cost than that of another nation, which means that trade between the two nations can be beneficial to both if each specializes in the production of a good with lower relative opportunity cost. While this law is fundamental to the study of international trade, it also applies to other activities, especially the specialization and the division of labor.
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                           ECONOMIC GOOD: A tangible item produced with society's limited resources for the purpose of satisfying wants and needs. As a general notion, the phrase economic good also commonly includes intangible services produced with society's limited resources for the purpose of satisfying wants and needs. A synonymous term for economic good is scarce good. Adding the word "economic" before the word "good" signifies that a good has limited availability relative to desired use and is thus subject to economic analysis. An economic good is typically exchanged through a market. Buyers pay a price to obtain the good and sellers give up the good in exchange for payment.ScarcityLike many economic concepts, an economic good can be traced to the fundamental problem of scarcity. Scarcity is the widespread condition of limited resources and unlimited wants and needs. An economic good is more specifically a good with limited availability relative to desired use. The two concepts are closely related. Scarcity is the general problem underlying the study of economics and an economic good is a specific good that reflects this general scarcity condition.The contrasting notion to an economic, or scarce, good is a free good. A free good is one that is plentiful enough to satisfy all desired uses, often with some left over. Market ExchangesBecause limited availability means that an economic good has more uses that it can meet, it is generally exchanged through a market. The market price serves to allocate the good to its most satisfying and valuable use. Users gaining the greatest benefit from the economic good are willing to pay the highest price and can thus out bid other potential users to gain control. Moreover, payment received by those who produce or otherwise have control of the economic good compensates for the opportunity cost of foregone alternatives.Economic ResourceThe word "economic" is also added to the word "resource" to reflect a similar concept. The difference is that an economic resource is used to produce an economic good. The resource is transformed or used for production and the good is then used to provide satisfaction. However, in both cases the item is limited relative to the desired use.More than MarketsWhile most economic goods are traded through markets, some are directly produced or provided by government. In addition to limited availability relative to desired use, the market exchange of an economic good also requires rival consumption and nonpayer excludability. Economic goods that do not have rival consumption and/or nonpayer excludability are termed public goods, near-public goods, or common-property goods. But they are economic goods nonetheless.
Recommended Citation:ECONOMIC GOOD, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2021. [Accessed: December 2, 2021].
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Today, you are likely to spend a great deal of time waiting for visits from door-to-door solicitors looking to buy either a dozen high trajectory optic orange golf balls or a large red and white striped beach towel. Be on the lookout for neighborhood pets, especially belligerent parrots.
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The first U.S. fire insurance company was established by Benjamin Franklin in 1752 in Philadelphia.
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