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