Create an account
The situation in which unlimited wants exceed the limited resources available to fulfill those wants
A group of buyers and sellers of a good or service and the institution or arrangement by which they come together to trade
The idea that because of scarcity, producing more of one good or service means producing less of another good or service
Centrally Planned Economy
An economy in which the government decides how economic resources will be allocated
An economy in which the decisions of households and firms interacting in markets allocate economic resources
An economy in which most economic decisions result from the interaction of buyers and sellers in markets but in which the government plays a significant role in the allocation of resources
The situation in which a good or service is produced at the lowest possible cost
A state of the economy in which production is in accordance with consumer preferences; in particular, every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it
The situation that occurs in markets when both the buyer and seller of a product are made better off by the transaction
Something measurable that can have different values, such as the wages of software programmers
The study of how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices
The study of the economy as a whole, including topics such as inflation, unemployment, and economic growth
Someone who operates a business. In a market system, they decide what goods and services to produce and how to produce them, often putting their own funds at risk.
The practical application of an invention, or more broadly, any significant improvement in a good or in the means of producing a good
Firm, company, or business
An ORGANIZATION that produces a good or service. (Most organizations produce goods or services for profit, but there are also NON-PROFITS, such as universities or some hospitals)
The total amount received for selling a good or service, calculated by multiplying the price per unit by the number of units sold
Financial or physical. FINANCIAL includes stocks, bonds issued by firms, bank accounts, and holdings of money. PHYSICAL includes manufactured goods that are used to produce other goods and services. Examples of PHYSICAL are: computers, factory buildings, machine tools, warehouses, and trucks
The accumulated training and skills that workers possess. For example, college-educated workers generally have more skills and are more productive than workers who have only high school degrees
Production Possibilities Frontier (PPF)
A curve showing the maximum attainable combinations of two products that may be produced with available resources and current technology
The ability of an individual, firm, or country to produce more of a good or service than competitors, using the same amount of resources
The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than competitors
Markets for the factors of production, such as labor, capital, natural resources, and entrepreneurial ability
Factors of Production
The inputs used to make goods and services (labor, capital, human capital, natural resources-including land, and entrepreneurial ability)
A market with FEW government restrictions on how a good or service can be produced or sold - or on how a factor of production can be employed
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