Economic Systems

Land

All natural resources used to produce goods and services, including crops, minerals, and rent.

Labor

The effort that an individual puts into making a good or service, paid with a wage.

Capital

Anything used to produce other goods and services, such as machines, trucks, and buildings.

Specialization

A method of production where an individual focuses on a limited scope of goods to gain efficiency.

Invisible Hand

The forces that guide people to do what is best for themselves, as described by Adam Smith.

Laissez-faire

A French term meaning 'hands-off,' recommended by Smith for government policy towards the economy.

Capitalists/Bourgeoisie

The factory and resource owners in Marx's theory who exploit the working class.

Proletariat

The working class in Marx's theory who are exploited by the capitalists.

Economic Inequality

A condition in the capitalist system where the poor lack value and lead miserable lives.

Scarcity

The limited availability of resources which necessitates decision-making.

Trade-off

A sacrifice made when choosing one option over another.

Opportunity Cost

The value of any alternative that must be given up when making a choice.

Thinking at the Margin

Considering the additional value of an extra unit of something and weighing costs and benefits.

Economic Incentives

Financial motivations that drive individuals to take specific actions.

Benefits Forgone

Opportunities that were missed or not taken advantage of in the past.