1.1

scarcity

the demand for goods is greater than the goods availability; manufacturers can’t meet needs of consumers

market economy

people and businesses control the economy

• what’s being produced is based on what consumers are buying (trends)

• private ownership of businesses

command economy

economy is run by central authority. controls production and buying patterns

• often government run

marginal analysis

what is being lost per unit of output to receive a certain benefit. is the sacrifice worth it?

Law of Diminishing Returns

Returns (benefits) become lesser as units of output increase

margin

what is lost/gained per unit of output

CELL

acronym for the Four Resources/factors of production

capital

anything used to produce another good

• tools

• factories

entrepreneurship

(person) risk taking, initiative, organization

land

natural resources

• OIL!!!

labor

the effort of workers

opportunity cost

everything given up to get something

• $

• NEXT opportunity/chance given up

financial/explicit cost

money given up

intangible/implicit cost

time or opportunity given up

positive statements

factual and measurable

normative statements

opinion based (unmeasurable)

aggregate

total/cumulative