Unit 1 Fundamental Concepts Vocabulary

specialization

concentrating on and becoming expert in a particular subject or skill

allocate

distribute (resources or duties) for a particular purpose.

market economy

economy based on private ownership and the determination of prices by supply and demand

command economy

economy in which the government makes all economic decisions

mixed economy

economy that has elements of a market and command economy

physical capital

equipment, tools and resources used to create other goods and services

voluntary exchange

people/businesses freely choose to engage in market transactions

entrepreneurship

risk-taker in search of profits that starts a business

human capital

skills and knowledge of workers

efficiency

society getting the most it can from its scarce resources

incentive

something that motivates or encourages a person to do something

marginal cost

the cost of a decision once it is weighed against the benefits

equity

the state or quality of fair and equal treatment

regulation

using laws to control what businesses can do

opportunity cost

value of the next best alternative that you could have chosen

Natural Resources (Land)

Materials or substances such as minerals, forests, water, and fertile land that occur in nature and can be used for economic gain

scarcity

a basic condition that exists when unlimited wants exceed limited productive resources

trade-off

act of giving up one thing of value to gain another

marginal benefit

amount of benefit a person, business, or government receives once the cost of their decision is considered

investment

business spending on new machinery, tools, or equipment