Economics - Unit 1

scarcity
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Terms in this set (19)
scarcity
A situation in which unlimited wants exceed the limited resources available
Image: scarcity
opportunity cost
The most desirable alternative given up as the result of a decision
Image: opportunity cost
trade off
alternatives that must be given up when one is chosen over another
Image: trade off
rational decision
is a systematic process of defining problems, evaluating alternatives, and choosing optimal solutions - marginal benefits equal or exceed the marginal costs
production possibilities graph
a graph that shows alternative ways to use an economy's productive resources
Image: production possibilities graph
command economy
An economic system in which the government makes all economic decisions. There is no private ownership, consumer sovereignty, or competition.
Image: command economy
market economy
Economic decisions are made by individuals or the open market. No government involvement, and therefore experiences many market failures.
Image: market economy
mixed market economy
economic system that combines both private ownership and government ownership of the means of production - this is the type of economic system we have in the U.S.
Image: mixed market economy
specialization
Goods and services are produced in better quality, quantity and speed when people focus on producing a few things instead of making everything they want by themselves.
Image: specialization
efficient
making good use of available time or resources - technology and specialization make us more efficient
productive resourcesinclude Natural resources (land), human resources, capital resources and entrepreneurshipland resourceResources that come from the earth.labor resourceAll human effort and skill used to produce goods and services. It can involve physical or intellectual skills. eg, teacher, gardener, plumber, mechanic.capital resourceThe tools, equipment, and buildings that are used to produce goods and servicesentrepreneurA person who organizes, manages, and takes on the risks of a business. Takes risks in order to make a profit.public gooda shared good or service for which it would be impractical to make consumers pay individually and to exclude nonpayers (ex: roads, police protection, highways, parks, schools, etc)government regulationthe act of government controlling business behavior through a set of rules or lawsmarket failurea situation in which a market left on its own fails to allocate resources efficientlysafety netgovernment programs that protect people experiencing unfavorable economic conditions

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