The Core Concepts
This fundamental problem exists because our wants are infinite but resources are not.
What is scarcity?
What is capital?
In this system, economic decisions are based on what has been done for generations.
What is traditional economy?
This occurs when multiple businesses fight for customers, usually leading to better quality.
What is competition?
These are products, like national defense, that the public consumes as a group.
What are public goods?
If you choose to buy a pizza instead of a burger, the burger is known as this.
What is opportunity cost?
This factor represents the human effort and time put into creating a product.
What is labor?
This type of economy relies on a central authority to make all major production decisions.
What is a command economy?
These are "carrots" (rewards or penalties) that change how people act.
What are incentives?
This term describes a side effect of a transaction that affects someone not involved in it.
What is an externality?
Every choice involves one of these - the act of giving up one benefit to gain another.
What is a trade-off?
This factor includes all natural resources like water, oil, and minerals.
What is land?
In this system, individuals and private businesses own the factors of production.
What is a market economy?
This concept explains why producers start making more of a product when buyers demand it.
What is consumer demand or sovereignty?
A government might use this type of payment to encourage a behavior that benefits society.
What is a sibusidy?
Because of scarcity, every society must answer this many "basic economic questions."
What is three?
This specific person is the "risk-taker" who combines all other factors to start a business.
What is an entrepreneur?
Most modern nations use this system, which blends market freedom with government regulation.
What is a mixed economy?
In a market economy, this group ultimately decides what gets produced based on their spending.
What are consumers?
To discourage a company from polluting, a government might use these financial penalties.
What are taxes or fines?
This is the specific term for the value of the best alternative you didn't choose.
What is opportunity cost?
Vision and the willingness to face potential failure are two key traits of this factor.
What is entrepreneurship?
This is one major disadvantage of a traditional economy compared to a market economy.
What is low productivity or standard of living?
This is the main reason why competition helps consumers keep more money in their pockets.
What is lower prices?
This occurs when the market on its own does not distribute resources effectively.
What is market failure?