financial literacy unit 1 vocab

Capital

The buildings, tools, and machines people create and use to produce final goods and services

Consumer

A person who buys goods and services

Consumption

the process of buying and using a good or service

Entrepreneurship

The process of identifying an opportunity to innovate or start a business in order to create value and earn a profit

4 factors of production

The resources needed to make goods and services

1. Natural resources

2. Human labor

3. Capital

4. Entrepreneurial talent

Free enterprise

A system in which economic decisions are made in markets by people and businesses with little government influence

Human labor

The physical and mental effort used to produce goods and services

Loss

The total cost of production exceeds revenue

Mixed market economy

An economic system in which decisions about production and consumption are driven in part by supply and demand and in part by government command and/or traditional elements, combining 2 or more types of economic systems

Natural resources

Materials used in production that are provided by nature, like water, minerals, and trees

Opportunity cost

The highest valued alternative given up as a result of making a choice

Profit

Money earned in excess of what it costs to produce goods and services

Revenue

Money earned from sales

Scarcity

A condition that exists between unlimited wants and needs and the limited resources available to satisfy them, requiring people to make choices

Self interest

A motivating factor that leads individuals to focus on those actions and choices that promise the most personal benefit and involve the least cost