Like this study set? Create a free account to save it.

Sign up for an account

Already have a Quizlet account? .

Create an account


factor of production used by labor in making products


the study of how people seek to satisfy their needs and wants by making choices


the process of starting, organizing, managing, and assuming the responsibility for a business

Factors of Production

What must be combined to produce goods and serives

Four Basic Economic Questions

What to produce, how to produce, how much to produce, and for whom to produce


Any form of human effort exerted in production

Land/Natural Resources

Productive resources that are provided by nature


A basic requirement for survival


A way of expressing or communicating a need


a person who uses goods or services


tangible products that we use to satisfy our wants and needs

Opportunity Cost

The next best option that you didn't get. The one you gave up


someone who manufactures something


money earned for doing work


Intangible things that satisfy human wants and needs

Fixed Costs

The costs or expenses that are the same no matter how many units of a good are produced


Encourages you to purchase a good or service

Total Costs

Fixed Costs + Variable


Meaning that to achieve one we must sacrifice another.

Variable Costs

change generally depends on output

Assembly Line

Production method that breaks down a complex job into a series of smaller tasks


the use of machinery in place of human labor

Blue Collar

Worker who do jobs that involve manual labor

Human Capital

Skills, training, and knowledge of workers


Invention and technological advances that increase economic activity

Mass Production

process of making large quantities of a product quickly and cheaply


the creation of value or wealth by producing goods and services

Skilled Workers

a trained worker who has special skills for a job


the development of skills in a specific kind of work

Unskilled Workers

general worker who can perform any job that requires no special knowledge or skill

White Collar

Workers who typically work for management in offices

Capital Goods

productive resources consisting of human-made materials needed to produce goods and services (including buildings, machinery, equipment and tools)

Consumer Goods

goods (as food or clothing) intended for direct use or consumption

Human Resources

People who work to produce goods and services

Law of Diminishing Return

Economic Law that at some point increasing one factor of production only will decrease productivity

Produces Price Index (PPI)

Monthly report on the costs of production to procedures

Productive Resources

Resources that can be used to produce other things.


Economic system in which businesses are privately owned and operated for profit and where free markets coordinate most economic activity

Command Economy

An economic system in which the government controls production.


political system in which the government owns and operates all factors of production

Communist Manifesto

Written by Karl Marx and Friedrich Engels, arguing that the economy would be fair only if workers controlled production

Deficit Spending

when a government spends more money than it takes in

Fiscal Policy

Changes in government spending or tax policy in response to a period of high unemployment

Free Enterprise

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

Invisible Hand

Concept in a market economy where individuals are allowed to pursue their own self-interests w/out interference by government, the actions would do what is best for society


policy based on the idea that government should play as small a role as possible in the economy


the world of commercial activity where goods and services are bought and sold

Market Economy

Questions are answered by households and business through a system of freely operating markets

Mixed Economy

Has characteristics of both a command and a market economy

Profit Motive

the drive for people to make money


Government owns utilities and major businesses but permits private ownership of some business

The Keynesian Theory

government sponsered programs should increase jobs and stimulate business activity.

Wealth of Nations

Adam Smith's book that argued that the market should regulate itself.

Please allow access to your computer’s microphone to use Voice Recording.

Having trouble? Click here for help.

We can’t access your microphone!

Click the icon above to update your browser permissions and try again


Reload the page to try again!


Press Cmd-0 to reset your zoom

Press Ctrl-0 to reset your zoom

It looks like your browser might be zoomed in or out. Your browser needs to be zoomed to a normal size to record audio.

Please upgrade Flash or install Chrome
to use Voice Recording.

For more help, see our troubleshooting page.

Your microphone is muted

For help fixing this issue, see this FAQ.

Star this term

You can study starred terms together

Voice Recording