Econ Unit 2

Traditional Economy

An economy that has little change is based on traditions, where people follow the work of their parents.

Command Economy

An economy in which the government controls a country's economy.

Mixed Economy

An economy in which private enterprise exists in combination with government regulation and promotion.

Market Economy

an economy in which decisions regarding investment, production, and distribution are based on supply and demand, and consumers can buy whatever they want.

Capitalism

An economic system based on private property and free enterprise.

Socialism

A system in which society, usually in the form of the government, owns and controls the means of production.

Communism

An economic system where factors of production are collectively owned and directed by the state.

Economics

The study of how people seek to satisfy their needs and wants by making choices

Three economic questions

What to produce? How to produce? For whom to produce?

Economic Freedom

freedom from government intervention in the production and distribution of goods and services

Economic Efficiency

wise use of available resources so as to obtain the greatest benefits possible

Economic Equity

the fairness with which an economy distributes its resources and wealth

Economic Growth

the ability of the economy to increase the production of goods and services

Economic Security

the idea that the less fortunate members of society should get the economic support they need to live a decent life

Economic Stability

a condition in which the goods and services people count on are available when they want them

opportunity cost

the most desirable alternative given up as the result of a decision

Trade-off

an alternative that we sacrifice when we make a decision

Scarcity

A situation in which unlimited wants exceed the limited resources available to fulfill those wants - permanent

shortage

a situation in which a good or service is unavailable - temporary

capital good

A manufactured item used to produce other goods and services

consumer goods

goods produced for present consumption

human capital

the knowledge and skills a worker gains through education and experience

physical capital

all human-made goods that are used to produce other goods and services; tools and buildings

labor

the effort that people devote to a task for which they are paid