The study of how people seek to satisfy their needs and wants by making choices
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Scarcity
The most basic issue of economics where there is unlimited wants and limited resources.
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an entrepreneur
Is a person who takes the risk to set up a new business in the hope of making a profit.
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Land as a factor of production
natural resources that contribute to production
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Labor as a factor of production
The physical and mental human effort used in the production process
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Physical Capital
all human-made goods that are used to produce other goods and services; tools, buildings, money
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Human Capital
the skills and knowledge gained by a worker through education and experience
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Entrepreneurship
The risks you take to improve production
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opportunity cost
Cost of the next best alternative use of money, time, or resources when one choice is made rather than another
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Marginal Cost
the cost of producing one more unit of a good
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marginal benefit
the extra benefit of adding one unit
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production possibilities curve
A curve showing the different combinations of two goods or services that can be produced in a full-employment, full-production economy where the available supplies of resources and technology are fixed.
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production possibilities frontier
the line on a production possibilities graph that shows the maximum efficiency
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The law of increasing costs
law that states that as we shift factors of production from making one good or service to another, the opportunity cost increases
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An economic system
the method used by a society to produce and distribute goods and services
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A free market economy
an economic system in which decisions on the three key economic questions are based on voluntary exchange in markets
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The factor/resource market
where the factors of production are bought and sold
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The product/service market
Final goods are bought and sold
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Capitalism
A market based economic system where individuals own and control the FOP
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Democratic Socialism
An economic system where the FOP are partially controlled by the people and their elected officials.
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authoritarian socialism (communism)
An economic system where the FOP are entirely controlled by the people and their elected officials.
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Laissez-faire economics
hands off approach to government; the government should not interfere in the economy "Allowed to do"
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mixed economy
an economic system combining market and command.
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Macroeconomics
The study of the economy as a whole
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Microeconomics
the study of how households and firms make decisions and how they interact in markets
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Adam Smith
father of capitalism and champion of the free market
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eminent domain
the right of government to take private property for public use
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