Introduction to Economics: Market Systems, Scarcity, and Money

Vocabulary flashcards covering core economic concepts, including economic systems, factors of production, trade-offs, market forces, and the functions of money based on lecture notes.

Free Market Economy vs. Command Economy

A comparison showing the differences between free market and command economies across ownership, incentives, prices, efficiency, equality, examples, and economic problems.

Market Economy

An economic system where economic activity is unplanned and determined by the supply and demand of goods and services rather than a central authority.

Command Economy

An economic system organized by a centralized government that owns most, if not all, businesses and where government officials direct all factors of production.

Microeconomics

The branch of economics that focuses on individuals or businesses.

Macroeconomics

The branch of economics that focuses on society as a whole.

Scarcity

The fundamental economic problem of having unlimited wants but limited resources.

Land

A factor of production consisting of natural resources, which earns rent.

Labor

A factor of production consisting of human effort, which earns wages.

Capital

A factor of production consisting of machines and equipment, which earns interest.

Entrepreneurship

A factor of production that brings land, labor, and capital together with an idea or vision.

Utility

The satisfaction derived from consuming a good or service.

Diminishing Marginal Utility

The economic concept stating that each additional unit of a good consumed brings less satisfaction than the previous one.

Opportunity Cost

What is given up by making a particular decision or choice.

The Invisible Hand

A concept coined by Adam Smith describing unseen market forces that drive a free economy through self-interest and voluntary trades, inadvertently benefiting overall societal welfare.

Medium of Exchange

A primary function of money that facilitates transactions and trade.

Store of Value

A function of money that allows it to maintain purchasing power and be held as an asset.

Unit of Account

A function of money that serves as a standard measurement of economic value.

Fiat Currency

Currency declared by the government to be legal tender for all public and private debts, relying on public trust and confidence for its value.