Economics Vocabulary

trade-off

when you give up something to get something else

individual choices

are decisions by individuals about what to do, which necessitate decisions about what not to do

resource of factor of production

anything that can be used to produce something else

land

refers to all resources that come from nature, such as timber, wind, and petroleum

labor

the effort of workers

capital

refers to manufactured goods used to make other goods and services

entrepreneurship

describes the efforts of entrepreneurs in organizing resources for production, taking risks to create new enterprises, and innovating to develop new products and production processes

scarce

resource is not available in sufficient quantities to satisfy all the various ways a society wants to use it

marginal analysis

the study of costs and benefits of doing a little bit more of an activity versus a little bit less

opportunity costs

the real cost of an item: the value of the next best alternative that you must give up in order to get the item

microeconomics

the study of how individuals, households, and firms make decisions and how those decisions interact

household

a person or group of people who share their income

firm

any organization that produces goods or services for sale

macroeconomics

concerned with the overall ups and downs of the economy

economy

a system for coordinating a society’s productive and consumptive activities

traditional economy

production and consumption decisions are based on precedent

market economy

the factors of production are privately owned, and the decisions of individual produces and consumers largely determine what, how, and for whom to produce

command economy

factors of production are publicly owned and a central authority makes production and consumption decisions

mixed economy

combines elements of traditional, market, and command economies

incentives

rewards or punishments that motivate particular choices

property rights

establish ownership and grant individuals the right to trade goods and services with each other

economics

the study of scarcity and choice

marginal benefits

the additional satisfaction a consumer receives from increasing consumption

marginal costs

the additional costs earned by consuming or producing more goods and services

competition

this is rivalry among entities to increase market share and attract consumers influenced by the product and number of sellers