Honors Econ: Unit 10 - Basic Economics

Economics

a social science concerned with the production, distribution, and consumption of goods and services. Economics is the study of choice

Scarcity

The condition in which there are not enough resources available to produce everything that individuals demand

Scare Good

One for which the choice of one alternative requires that another be given up

Free Good

One for which the choice of one use does not require that we give up another

Opportunity Cost

The value of goods and services that are given up in order to obtain an alternative good or service

Factors of Production

The resources needed to produce goods and services, including land, labor, capital, and entrepreneurship

Resources

Supplies of something of value

Land

Specific items that humans get from nature, such as natural resources or things that are produced by the land, such as farm products

Labor

The human effort that can be applied to the production of goods and services

Capital

A factor of production that has been produced for use in the production of other goods and services

Entrepreneur

The person with the idea to create a product or develop a service

Economic System

A process created to manage the production, consumption, and distribution of goods and services

Traditional Economy

Traditions, customs, and beliefs help shape the goods and services the economy produces, as well as the rule and manner of their distribution

Command Economy

A central government authority dictates the levels of production that are permissible and the prices may be charged for goods and services

Market Economy

In which economic decision and the pricing of goods and services are guided by the interactions of a country’s individual citizens and business

Free Enterprise System

An economic system characterized by private ownership of businesses operated for profit with economic freedom for both consumers and producers

Capitalism

Another term for a free market system or free enterprise system, must have economic freedom, competition, voluntary exchange, private property rights, and a motive to earn profits (incentives)

Economic Freedom

Freedom as the right of individuals to pursue their interests through voluntary exchange of private property under rule of law