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tangible products that we use to satisfy our wants and needs


work performed for someone else

factors of production

resources necessary to produce goods and services

natural resources

"gifts of nature" that make production possible


human resources


the manufactured goods used to make other goods and services.


An individual who starts a new business, introduces new produces, and improve processes

Gross Domestic Product

The total value in dollars of all the final goods and services produced in a country during a single year


the free and willing exchange of goods and services between buyers and sellers

factor market

the markets where productive resources are bought and sold

product market

markets where producers offer goods and services for sale.


A measure of the amount of output produced by a given level of inputs in a specific period of time


People, businesses, regions, or even countries concentrate on goods and services that they can produce better than anyone else

division of labor

Breaking down a job into small tasks performed by different workers


an economic system in which private citizens own and use the factors of production in order to seek a profit

free enterprise

economic system in which individuals and businesses are allowed to compete for profit with a minimum of government interference

consumer sovereignty

Describes the consumer as the "king" or ruler, of the market, the one who determines what products will be produced

private property rights

Citizens have the freedom to own and use, or dispose our own property as we choose as long as we don't interfere with the rights of others.


the struggle between buyers and sellers to get the best products at the lowest prices


the amount of money left over after all the costs of production have been paid

profit motive

the driving force that encourages individuals and organizations to improve their material well-being

voluntary exchange

The act of buyers and sellers freely and willingly engaging in market transactions


The desire, willingness, and ability to buy a good or service.

demand schedule

A table that lists the various quantities of product or service that someone is willing to buy over a range of prices.

demand curve

is a graph that shows the amount of a product that would be bought at all possible prices in the market

law of demand

quantity demanded and price move in opposite directions

market demand

The total demand of all consumers for their product or service


The pleasure, usefulness, or satisfaction we get from using the product

marginal utility

additional satisfaction


Competing products


Used together

demand elasticity

the extent to which a change in price causes a change in the quantity demanded


Various quantities of a good or service that producers are willing to sell at all possible market prices

law of supply

The principle that suppliers will normally offer more for sale at higher prices and less at lower prices

supply schedule

A numerical chart that illustrates the law of supply

supply curve

A graph that shows the amount of a product that would be supplied at all possible prices int he market.

market supply

Total of supply schedules of all the businesses that provide the same good or service


The methods, or processes, used to make goods and services.

supply elasticity

A measure of how the quantity supplied of a good or service changes in response to changes in price


The amount by which the quantity supplied is higher than the quantity demanded


The amount by which the quantity demanded is higher than the quantity supplied

equilibrium price

The point when supply and demand are balanced

price ceiling

the maximum price set by the government that can be charged for goods and services.

price floor

a government minimum price that can be charged for goods and services.

minimum wage

the lowest legal wage that can be paid to most workers

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