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Scarcity
The state of having limited resources but unlimited wants and needs
Resources
Product Markets
Where consumers purchase good and services
Revenue
The payment a business recieves for their goods and services
Factor Market
Where businesses purchase what they need to produce their goods and services
The Factors of Production
The resources needed for businesses to produce goods and services
Capital
Resources the improve productivity
Subsidy
Money granted by the government to businesses in order to influence their behavior
Transfer Payment
Money granted to households by the government in order to influence their behavior in some way
Consumer Goods
Products purchased for direct use
Capital Goods
Products used by a business in order to produce consumer goods and services
Production Possibilities Curve (PPC)
A graph illustrating the possible output combinations of two goods based on a set amount of resources
Opprotunity Cost
The next-best alternative sacrificed or foregone in any choice
Law of Increasing Opprotunity Cost
As you continue to increase production of one good, the opprotunity cost of producing the next unit increases
Comparative Advantage
The ability to produce something with a lower opprotunity cost
Explicit Costs
Expenses directly spent on an action
Implicit Costs
The most valuable economic activity that did not occur because of a choice
Utility
Broadly means usefulness, but specifically personal satisfaction
Coordinating Mechanism
The whole set of institutions that determine resource allocation
Command Economy
Central planning by the government using involuntary laws, taxes, regulations, and restrictions
Market Economy
Price determined by voluntary negotiation of buys and sellers. Protections for private ownershi and control of resources by households and businesses
Law of Diminishing Marginal Utility
As more and more of an input is used in the short-run production, the marginal product eventually declines
Note 
Flashcard (20)