Basic Economics Terms
What is the term for the condition where resources are limited and cannot satisfy all human wants?
Scarcity
What is the term for the skills, knowledge, and experience that contribute to productivity?
Human Capital
If you spend money on a concert ticket, what is the opportunity cost of that decision?
The next best alternative you give up, such as the money you could have spent on other things or the time you could have used for something else.
What do we call the additional benefit you receive from consuming one more unit of a good or service?
Marginal Benefit
What type of economy is driven by supply and demand, where individuals make most decisions?
Market Economy
What is a good that is available in abundance and doesn't cost anything to consume?
Free Good
Which factor of production includes the tools, machines, and buildings used to produce goods and services?
Capital
Why does scarcity force us to make choices in an economy?
Because resources are limited, but human wants are infinite.
What is the process of comparing the costs and benefits of a decision before taking action?
Cost-benefit analysis
What is the type of economy where the government has control over the production and allocation of goods and services?
Command Economy
What do we call it when people or nations focus on producing one thing to become more efficient?
Specialization
Which factor of production involves the natural resources used to create goods and services?
Land
What is the next best alternative you give up when making a decision called?
Opportunity Cost
What are the additional costs incurred when producing one more unit of a good or service?
Marginal Cost
What is an example of a country with a mixed economy?
USA
What do we call it when both parties in a trade benefit from the exchange?
Voluntary Exchange
What is the factor of production where individuals take on the risk to organize resources and start businesses?
Entrepreneurship
If you had $20 and could either buy a book or a movie ticket, but you chose the book, what is your opportunity cost?
The movie ticket you didn't buy
What would you call the analysis of the extra benefit compared to the extra cost when making a decision?
Cost Analysis
In what kind of economy would all decisions about what to produce and how to produce it be made by the government?
Command Economy
What is the term for the action of giving up one thing to gain another? (Hint: it’s part of every decision you make.)
Trade-off
Which of the four factors of production involves human effort, both physical and mental?
Labor
What economic principle says that you can’t have everything you want because resources are limited?
Scarcity
What’s the term for the costs that come from using your resources in one way instead of another?
Opportunity Cost
What is the term for a nation that allows both private and public enterprises to coexist and influence economic outcomes?
Mixed Economy