Unit 4 vocab

Economics

The study of how people choose to use their limited resources to satisfy their unlimited wants.

Economy

A system used to manage limited resources for the production, distribution, and consumption of goods and services.

Positive economics

The branch of economics that uses objective analysis to find out how the economy actually works.

Normative economics

The branch of economics that applies value judgments to data to recommend actions or policies on how things ought to be done.

Scarcity

The condition resulting from limited resources and unlimited wants.

Tradeoff

The exchange of one benefit for another considered better.

Cost-benefit analysis

A method to compare the costs and benefits of an action to determine its worthiness.

Incentive

Something that motivates a person to take a specific course of action.

Goods

Physical articles produced for sale or use.

Services

Work done by others for which payment is made by consumers, businesses, or governments.

Factors of production

Resources like land, labor, and capital used to produce goods and services.

Entrepreneurship

The willingness and ability to take risks in starting and managing a business.

Capital

Tools, machines, and buildings used in the production of goods and services.

Productivity

Efficiency measure of goods and services production, output per unit of input.

Opportunity cost

The value of the next best alternative given up when making a choice.

Production possibilities frontier

A model showing all possible combinations of two goods that can be produced with current resources and technology.

Economic equity

Fairness in the distribution of resources and wealth in an economy.

Economic system

A society's way of coordinating the production and consumption of goods and services.

Traditional economy

Economic system based on customs and traditions for production and consumption decisions.

Command economy

Economic system where a powerful ruler or government makes production and consumption decisions.

Market economy

Economic system where economic decisions are made by individual producers and consumers.

Factor payment

Income earned by selling or renting a factor of production, like wages for labor.

Mixed economy

An economic system where both government and individuals have significant roles in production and consumption.

Free enterprise system

Economic system where means of production are privately owned and operated for profit.