1.
Absolute advantage: The ability of an individual, firm, or country to produce more of a good or service than competitors using the same amount of resources.
2.
Circular-flow diagram: A model that illustrates how participants in markets are linked.
3.
Comparative advantage: The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than other producers.
4.
Economic growth: The ability of the economy to produce increasing quantities of goods and services.
5.
Entrepreneur: Someone who operates a business, bringing together the factors of production - labor, capital, and natural resources - to produce goods and services.
6.
Factor markets: Markets for the factors of production, such as labor, capital, natural resources, and entrepreneurial ability.
7.
Free market: A market with few government restrictions on how a good or service can be produced or sold or how a factor of production can be employed.
8.
Market: A group of buyers and sellers of a good or service and the institution or arrangement by which they come together to trade.
9.
Opportunity cost: The highest-valued alternative that must be given up to engage in an activity.
10.
Product markets: Markets for goods - such as computers - and services - such as medical treatment
11.
Production possibilities frontier: A curve showing the maximum attainable combinations of two products that may be produced with available resources.
12.
Property rights: The rights individuals or firms have to the exclusive use of their property, including the right to buy or sell it.
13.
Scarcity: The situation in which unlimited wants exceed the limited resources available to fulfill those wants.
14.
Trade: The act of buying or selling.
