Vocab 1
economics
Social science dealing with how people satisfy seemingly unlimited + competing needs and wants with careful use of scarce resources
good
useful tangible item
market economy
an economic system where decisions regarding investment, production, and distribution are guided by price signals created by the forces of supply and demand
scarcity
the fundamental economic problem of having seemingly unlimited human wants and needs in a world with limited resources
standard of living
the threshold of a survivable quality of life based of wages and the cost of living in an economy
production
combining inputs, such as raw materials, labor, capital, and knowledge, to create goods or services that have value and satisfy human wants
consumer
an individual or group who purchases or uses goods, products, or services primarily for personal, family, or household needs rather than for resale or business production
supply and demand
the amount of a commodity, product, or service available and the desire of buyers for it, considered as factors regulating its price
factors of production
entrepreneur
capital
land
labor
circular flow chart
a visual economic model illustrating the continuous, closed-loop movement of money, resources, goods, and services between households and businesses
distribution
the process of making products or services available to consumers, involving transportation, storage, and selling, or the spread of items/data over an area
producer
the primary creative and business manager behind a project
traditional economy
a system based on custom, history, and beliefs, where economic decisions what to produce, how to produce it, and for whom are guided by long-standing tradition
opportunity cost
the value of the next-best alternative you give up when making a decision
entrepreneur
an individual who identifies opportunities, organizes resources, and assumes significant financial risk to create new goods, services, or production processes for profit
consumption
the act of using, buying, or eating goods and services to satisfy needs and desires
capitalism
an economic and political system in which a country's trade and industry are controlled by private owners for profit
mixed economy
an economic system that combines elements of both private enterprise and state planning
production possibilities curve
a graph model representing the maximum efficient combinations of two goods a producer can produce given fixed resources and technology
inflation
the general increase in prices for goods and services over time, reducing the purchasing power of money
service
act or performance provided by one party to another, delivering value by solving a problem
socialism
an economic and political system defined by social or government ownership of the means of production, rather than private ownership
planned/command economy
a system where a central government authority makes all major decisions regarding the production, pricing, and distribution of goods and services
cost benefit analysis
a process used to evaluate the feasibility of a project, policy, or investment by comparing total expected benefits against total expected costs
substitutes/complements
substitutes: products that serve as alternatives where a price increase in one raises demand for the other (coffee/tea)
complements: products used together where a price rise in one decreases demand for the other (printers/ink)