Economic Fundamentals
The economic problem created when people's wants and needs exceed the resources available to satisfy them.
Scarcity
The term for something given up when making an economic choice.
Trade-Off
The money received by an individual or household is called...
Income
Differences in the amount of income earned or received by individuals or households.
Income Inequality
The economic system that primarily relies on customs and traditions to determine economic activities.
Traditional Economy
The difference between a want and a need.
Need = essential for basic survival
Want = not essential
The value of the next-best alternative given up when making a decision is called...
Opportunity Cost
The difference between a fixed expense and a variable expense.
Fixed = stays the same
Variable = changes depending on circumstance
A condition in which an individual or household lacks sufficient financial resources to meet basic needs.
Poverty
The economic system gives the government primary control over major production and resource-allocation decisions.
Command Economy
The term for distributing limited resources among competing uses.
Resource Allocation
A reward or consequence that influences a person's decisions.
Incentive
A financial plan outlining expected income and expenses over a particular period.
Budget
The difference between income distribution and wealth distribution is...
Income distribution concerns money received, while wealth distribution concerns accumulated assets and net worth.
The economic system that relies primarily on decisions by individuals and businesses through markets.
Market Economy
The four factors of production are...
Land, labor, capital, and entrepreneurship
A student chooses to work on Saturday instead of attending a concert. What is the opportunity cost?
Attending the concert
What is the difference between disposable income and discretionary income?
Disposable income is income after taxes; discretionary income is money remaining after taxes and necessary living expenses.
In the SPENT simulation, why could an unexpected medical bill make it harder to afford groceries or transportation?
The bill reduces the limited resources available for other necessary expenses.
An economic system combining market-based decision-making with government involvement.
Mixed Economy
Why does scarcity require individuals, businesses, and governments to make economic choices?
Because resources are limited, they must prioritize some uses over others and cannot satisfy every want or need.
A person compares the advantages and disadvantages of two purchases before choosing one. What economic decision-making process are they using?
Cost-benefit analysis.
Why might two households with the same income have different amounts of money available for optional purchases?
Their necessary expenses and financial circumstances may differ, including housing, transportation, healthcare, and family responsibilities.
Why might two families making similar financial decisions experience different economic outcomes?
Their income, expenses, available resources, and broader economic circumstances may differ.
Why can two countries both have mixed economies but different levels of government involvement?
Mixed economies vary in how much economic decision-making is left to markets and how much is influenced or directed by government.