Fundamental Economic Questions

A set of flashcards covering key vocabulary and concepts related to fundamental economic questions and systems.

Scarcity

A situation where resources are limited while needs are unlimited.

Allocation

The process of deciding what to produce with limited resources.

Production

The method of combining resources to create goods and services.

Distribution

The way goods and services are delivered to consumers.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

Efficiency in Allocation

Occurs when the goods and services produced align with community preferences.

Efficient Production

Achieving maximum output with minimum input of resources.

Market System

An economic system where individuals decide what to produce, how to produce, and for whom to produce.

Central Planning

An economic system in which the government makes all decisions about the production and distribution of goods.

Mixed Economy

An economic system where decision-making is shared between the government and individuals.

Production Possibility Curve (PPC)

A graph showing the maximum feasible amount of two goods that can be produced with available resources.

Command Economy

An economic system characterized by government control over production and distribution.

Free Market Economy

An economic system where prices are determined by unrestricted competition between privately owned businesses.

Capitalism

An economic system based on private ownership and free markets.

Trade-off

The consideration of the benefits and costs of selecting one option over others.