Basic Economic Concepts

Entrepreneur

A person who starts up and takes on the risk of a business

Economic Stability

A situation in which there is economic growth, rising national income, high employment, and steadiness in the general level of prices

Capital

Man made good used to produced other man made goods

Production Possibility Curve

Model Used by Economist to demonstrate scarcity, opportunity cost, trade-offs, and efficiency.

Economic Security

Provide for those who are chronically ill, disabled, laid off, aged, or otherwise unable to earn minimal levels of income

Factors of Production

Resources used to create goods and services

Economic Interdependence

The extent to which economic actions in one market or country affects the outcome in another market or county.

Economic Freedom

The freedom to own property, to make a profit, and to make choices about what to produce, buy, and sell

Scarcity

Unlimited Wants And Needs, But Limited Resources Used For Their Satisfacation.

The three basic economic questions

What to Produce?, How to Produce?, & For Whom to Produce?

trade-off

alternatives that must be given up when one is chosen over another

Economic Growth

an increase in the economy's ability to produce goods and services; reflected by an outward shift of the economy's production possibilities frontier

Opportunity Cost

cost of the next best alternative use of money, time, or resources when one choice is made rather than another

Mixed Economy

economic system that combines both private ownership and government ownership of the means of production

Traditional Economy

economic system that relies on habit, custom, or ritual to decide questions of production and consumption of goods and services

There is no such thing as a free lunch

everything has a cost, even if it is free. Think time, resources, etc.

Taxes

fees for the support of government required to be paid by people and businesses

Factor Market

market in which firms purchase the factors of production from households

Economic Efficiency

result of using resources that produce maximum amount of goods/services

Capitalism (Market) Economy

system in which individuals own the factors of production and make economic decisions through free interaction

Socialism (Command) Economy

system in which the government owns the factors of production and makes economic decisions

Economic Equity

the attempt to balance an economic policy so that everyone benefits fairly

Product Market

the market in which households purchase the goods and services that firms produce