ITB ch 1

Needs

The things that are required in order to live.

Wants

The things that add comfort and pleasure to your life.

Goods

The things that you can see and touch.

Services

Activities provided for the satisfaction of others that are consumed at the same time they are produced.

Economic Resources

The things available to be used to produce goods and services.

Scarcity

Not having enough resources to satisfy every need.

Economic Decision-Making

The process of choosing which needs and wants will be satisfied.

Trade-off

When you give up something to have something else.

Opportunity Cost

The value of the next best alternative that you were not able to choose.

Economic System

The method a country uses to answer the three economic questions.

Command Economy

The resources are owned and controlled by the government.

Market Economy

The resources are owned and controlled by the people of the country.

Traditional Economy

Goods and services are produced the way it has always been done.

Mixed Economy

Combines elements of the command and market economies.

Capitalism

Refers to the private ownership of economic resources by individuals, rather than by the government. Individual owners are free to decide what to produce with the resources they own.

Consumer

A person who buys and uses goods and services.

Producers

Individuals and organizations that determine what products and services will be available for sale.

Demand

The quantity of a good or services that consumers are willing and able to buy.

Supply

The quantity of a good or service that businesses are willing and able to provide.

Market Price

The point where supply and demand are equal.