Unit 1: Resources and Economic Systems Flashcards

Vocabulary flashcards covering economic systems, scarcity, resource allocation, factors of production, and key economic terminology from Unit 1.

System

A set of connected parts that work together to form a whole.

Economy

The network of producers, distributors, and consumers of goods and services in a local, regional, or national community.

Economic System

The way a society organizes the production, distribution, and consumption of goods and services to answer the three economic questions.

Resources

The things used to produce goods and services that meet people's needs and wants.

Scarcity

The situation in which resources are limited while human needs and wants are unlimited.

Opportunity Cost

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

Three Economic Questions

The core questions every society must answer: WHAT to produce, HOW to produce it, and FOR WHOM to produce it.

Traditional System

An economic system where decisions follow custom, family, and community roles handed down over generations.

Command System

An economic system where a central authority makes the main decisions through plans, orders, and state ownership of resources.

Market System

An economic system where private individuals and firms make decisions guided by prices, competition, and profit set by supply and demand.

Mixed System

An economic system in which both markets and government play major roles in decision-making and resource allocation.

Centralised Decision-Making

A decision-making process where economic decisions are concentrated and made mainly by one central authority, such as a government or leader.

Decentralised Decision-Making

A decision-making process where economic decisions are distributed among many individuals, businesses, or smaller groups.

Factors of Production

The resources used to produce goods and services, categorized as land, labour, capital, and entrepreneurship.

Land

Natural resources used in production, including soil, water, forests, minerals, oil, and farmland.

Labour

The human effort, skills, knowledge, and time used in the production of goods and services.

Capital

The manufactured tools, machinery, buildings, and equipment used to produce goods and services, distinct from financial money.

Entrepreneurship

The ability to organize and combine land, labour, and capital, make decisions, take risks, and create goods or services.

Needs

Things required for basic human survival and well-being, such as shelter, food, water, clothing, and healthcare.

Wants

Goods or services that people desire to have but are not necessary for basic survival.

Demand

The amount of a good or service that consumers are willing and able to buy at a given price.

Subsidy

A financial payment made by a government so that a good or service costs consumers less than its actual production cost.

Price Cap

A legal upper limit established by a government on the price that can be charged for a good or service.

Libreta

A ration book system used in Cuba that allows households to purchase small quantities of basic goods at a fraction of their cost.

Nationalise

The act of taking private assets, businesses, or industries into state ownership.

Embargo

An official legal ban on trade with a specific country.

Private Sector

The section of an economy that is owned and operated by private individuals and businesses rather than the government.