Economic Systems and Concepts

These flashcards cover key vocabulary and concepts related to economic systems and decision-making processes in economics.

Three Basic Economic Questions

What goods and services should be produced? How should these goods and services be produced? Who consumes these goods and services?

Private Ownership

The ability of individuals and businesses to own property and make economic decisions.

Profit Motive

The desire to earn a profit drives individuals and businesses to create and sell products.

Consumer Sovereignty

The power of consumers to determine what goods and services are produced through their purchasing choices.

Competition

The rivalry among businesses to attract customers, leading to better products and services.

Government Regulation

Laws and rules put in place by the government to ensure safety and fairness in the marketplace.

Scarcity

The basic economic problem arising because resources are limited while human wants are unlimited.

Opportunity Cost

The value of the next best alternative that must be given up when a choice is made.

Factors of Production

The resources used to produce goods and services, including land, labor, and capital.

Trade-offs

All the alternatives that are given up when making a decision.

Shortage

A temporary situation where a needed product cannot be obtained in sufficient amounts due to demand exceeding supply.

Human Capital

The skills, knowledge, and experience possessed by an individual or workforce.

Physical Capital

Human-made resources used in the production of goods and services.

Entrepreneurs

Individuals who start businesses using various factors of production.

Allocation Methods

Various ways to distribute resources, including price, majority rule, contest, force, lottery, authority, and personal characteristics.