| Term | Definition |
|---|
| Scarcity | A fundamental economic problem facing all societies. A condition that results from having scarce resources and unlimited wants of people. |
| Economics | A social science that studies how individuals, governments, firms and nations make choices on allocating scarce resources to satisfy their unlimited wants. |
| Need | A basic requirement for survival. Food, water, shelter. |
| Want | Something that is desired, but not necessarily needed. |
| Basic Economic Questions | What, How, Who. Each society has to decide what to produce with their scarce resources, and how they are going to produce it. Finally, they need to decide who gets what is produced. |
| Factors of Production | Land or natural resources, labor or human resources, capital resources are the machines used for the production, and entrepreneurship will bring the factors together. All four parts are necessary. |
| Gross Domestic Product (GDP) | The dollar value of all production within a country's borders. |
| Consumer Goods | Products made the individual consumption |
| Capital Goods | Products manufactured to make other goods or services |
| Services | Work done for you. You don't usually receive a good. Ex. Auto repair |
| Value | Worth of a good or service as determined by the market |
| Utility | A measure of satisfaction. Variable |
| Market | A place where buyers and sellers make exchanges |
| Circular Flow Model | A simplified model that shows how business firms, individuals, money, resources, goods, and services flow through our economy. |
| Factor Market | Where the factors of production are exchanged in the circular flow model |
| Product Market | Where goods and services are exchanged in the circular flow model |
| Economic Growth | A nation's total output of goods and services increases over time. The circular flow gets larger |
| Productivity | A measure of the amount of output produced by a given amount of inputs in a specific period of time. |
| Division of Labor | Production tasks broken down into smaller parts. Should allow for workers to specialize and increase production |
| Adam Smith | Famous economist believed in the invisible hand guiding the economy to help nations become wealthy. Also laissez faire, division of labor, and specialization |
| Laissez-faire | Belief that the government should have minimal interference with business. |
| Invisible hand | The market acts to help people make wise decisions. Businesses have to make and sell products that are needed or wanted to be able to be successful and allow for a healthy growing economy. |
| Trade-off | Alternatives that must be given up when something is chosen. |
| Opportunity Cost | The cost of the next best alternative when making a choice. 99% of students that came to school today say that their next best alternative was to be sleeping. |
| Production Possibilities Frontier | An economic model that shows what is possible to produce given a set of circumstances. |
| Traditional Economy | An economic system where the basic economic questions are answered the way they always have been. |
| Command Economy | An economic system where the basic economic questions are answered by the government. |
| Market Economy | An economic system where the basic economic questions are answered in the marketplace by buyers and sellers. |
| Inflation | The rising of prices |
| Capitalism-Free Enterprise | A system where private citizens own the factors of production |
| Economic Freedom | People are free to choose how to use the factors of production |
| Voluntary exchange | A trade made in which both parties benefit |
| Private Property Rights | The ability to own property allows people to use it for their own benefit. Fundamental for free enterprise |
| Profit Motive | Making money is the driving force behind the creation and continued development of products in the market place. Fundamental for free enterprise |
| Competition | Helps create better quality products and lower prices. Fundamental for free enterprise |
| Consumer sovereignty | The customer is always right. Products will only be successful if they are wanted in the market place. |
| Mixed economy | An economic system that combines elements of different economic systems |
| Modified private enterprise economy | The U.S. economy is mostly free enterprise, but is mixed with elements of other economic systems. |
| Guns v. Butter | Common production possibilities for wartime |
| ANWR | Alaskan National Wildlife Refuge |
Combine with other sets
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