Economics Basics Vocabulary
entrepreneur
a risk-taking individual in search of profits; one of 4 factors of production
utility
ability or capacity of a good or service to be useful & give satisfaction to someone
trade off
an alternative that must be given up when 1 is chosen rather than another
mixed economy
an economy in which people carry on their economic affairs freely but are subject to some gov. intervention and regulation
specialization
assignment of tasks so that each worker performs fewer functions more frequently; same as division of labor
need
basic requirement for survival; includes food, clothing, and/or shelter
opportunity cost
cost of the next-best alternative use of money, time, or resources when 1 choice is made rather than another
productivity
degree to which productive resources are used efficiently; normally refers to labor, but can apply to all factors of production
gross domestic product
dollar value of all final goods, services, & structures produced within a country's national borders in a one-year period
communism
economic & political system in which factors of production are collectively owned & directed by the state; theoretically classless society where everyone works for common good
command economy
economic system characterized by a central authority that makes most major economic decisions
socialism
economic system in which gov. owns some factors of production & has a role in determining what & how goods are produced
capitalism
economic system in which private citizens own & use factors of production in order to generate profits
market economy
economic system in which supply, demand, & the price system help people make decisions & allocate resources; same as free enterprise economy
traditional economy
economic system in which the allocation of scarce resources & other economic activity is the result of ritual, habit, or custom
profit
extent to which person or organizations are better off at the end of a period than they were at the beginning; usually measured in dollars
scarcity
fundamental economic problem facing all societies that results from a combination of scarce resources & people's virtually unlimited wants
consumer good
good intended for final use by consumers rather than businesses
economic product
good or service that is useful, relatively scarce, & transferable to others
fixed income
income that does not increase even though prices increase
product market
market where goods & services are offered for sale
factor market
market where productive resources are bought & sold
market
meeting place or mechanism allowing buyers and sellers of an economic product to come together; may be local, regional, national, or global
labor
people with all their abilities & efforts; 1 of 4 factors of production, does not include entrepreneurs
factors of production
productive resources that make up the 4 categories of land, labor, capital, & entrepreneurship
standard of living
quality of life based on ownership of necessities & luxuries that make life easier
inflation
rise in the general level of prices
economics
social science dealing with the study of how people satisfy seemingly unlimited & competing wants with the careful use of scarce resources
wealth
sum of tangible economic goods that are scarce, useful, and transferable, from 1 person to another; excludes services
free enterprise system
system in which competition is allowed to flourish with minimum gov. interference; term used to describe the American economy
good
tangible economic product that is useful, relatively scarce, transferable to others; used to satisfy wants & needs
competition
the struggle among sellers to attract consumers while lowering costs
capital good
tool, equipment or other manufactured good used to produce other goods & services; a factor of production
capital
tools, equipment, & factories used in the production of goods & services; 1 of 4 factors of production
want
way of expressing or communicating a need; a broader classification than needs
value
worth of a good or service as determined by the market