Economics Basics Vocabulary

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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


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