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Scarcity
Condition where wants exceed the ability of resources to satisfy them.
Trade-off
Giving up something to have something else.
Factors of Production
Scarce resources including land, labor, capital, and entrepreneurial ability.
Land
All natural resources used in producing goods and services.
Labor
Effort a person devotes to a task for which they are paid.
Capital
Human-made resource used to create other goods and services.
Entrepreneurial Ability
Leaders combining factors of production to create goods and services.
Economic System
Method a society uses to produce and distribute goods and services.
Command Economy
Government owns resources and answers basic economic questions.
Market Economy
Individuals and firms answer economic questions with private property.
Resource (Factor) Market
Where resources are sold to firms.
Product Market
Where goods and services produced by businesses are sold to households.
Opportunity Cost
Loss of benefit from choosing an alternative.
Production Possibilities Curve
Model showing alternative uses of scarce resources.
Absolute Advantage
Ability to produce more than another with the same resources.
Comparative Advantage
Ability to produce at a lower opportunity cost than another.
Specialization
Focusing production on select goods to increase efficiency.
Terms of Trade
Agreed conditions benefiting both countries in trade.
Explicit Costs
Costs involving actual money outlay.
Implicit Costs
Costs not requiring money outlay, measured by foregone benefits' value.
Marginal Analysis
Making decisions based on incremental changes.
Utility
Measure of personal satisfaction for a consumer.
Note 
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