| A | B |
|---|
| economics | Social science that studies the choices of producers and consumers as they try to satisfy unlimited wants and needs with limited resources. |
| land | Property and natural resources, one of the four factors of production. |
| labor | Work, one of the four factors of production. |
| capital | Factor of production, such as finances and capital goods. |
| entrepeneurship | Starting and expanding business enterprises, one of the four factors of production. |
| productivity | Amount of goods and services an economy makes, or output. |
| renewable resources | Natural resource that can be replaced, such as trees. |
| nonrenewable resource | Natural resources such as minerals and fossil fuels that cannot be replaced. |
| goods | Tangible products that people own, such as cars or CDs. |
| services | Intangible things that people use and cannot own, such as telephone service. |
| scarcity | Limited resources to fulfill unlimited needs and wants. |
| producer | Company or individual that makes goods or services that consumers purchase and use to satisfy their wants and needs. |
| consumer | Company or individual that purchases and uses goods or services to satisfy their wants or needs. |
| limited resources | Also called scarcity, the economic fact that no one has sufficient resources to meet all of his or her wants and needs. |
| decision-making model | Five-step process for making economic choices. |
| pricing | Free market mechanism that exchanges goods and services between buyers and sellers. |
| opportunity costs | Tradeoffs or the things that economic choices make us give up, as a nation or as individuals. |
| production | The supply of goods and services. |
| consumption | The demand of consumers. |
| incentives | Encouragement to purchase a good or use a service. |
| immediate gratification | Considering only short-term satisfaction when making a choice. |
| fixed cost | Costs to business that stay the same as productivity changes. |
| variable cost | Business cost that changes as productivity changes. |
| total costs | Sum of fixed costs and variable costs to businesses. |
| marginal costs | Economic cost of producing the next unit of a good or service. |
| specialization | The specific task and skills that an individual contributes to the division of labor. |
| assembly line | method of mass production used in factories. |
| factory | Building using mass production techniques such as the assembly line to make goods. |
| mass production | Making vast quantities of goods by using machinery and the division of labor. |
| human capital | Skills, training, and knowledge of workers. |
| innovation | Inventions and technological advances that increase economic productivity. |
| white-collar workers | People who typically work for management in offices. |
| blue-collar workers | People who do jobs that involve manual labor. |
| agribusiness | Large-scale farming and sale of farm inputs such as seed and fertilizer by large corporations. |
| investment | The idea of putting money to work to make more money. |
| capital goods | Products used in further production, such as machinery and raw materials. |
| inputs | Factors of production: land, labor, capital, and entrepeneurship. |
| outputs | The goods and services the economy produces. |
| productivity | The amount of output per unit of input. |
| market | In economies, where sellers and buyers exchange goods and services. |
| The Wealth of Nations | Adam Smith's classic 1776 statement on the virtues of a free-market economy. |
| capitalism | A market economy in which the choices of private businesses and individuals regulate production and exchange. |
| private property | Land, property, and capital that belongs to individuals. |
| self-interest | The concept of working for one's own gain. |
| profit motive | Reason people go into business, to make money. |
| profit | The total income of a business after subtracting all of its costs. |
| wage | Payment for labor. |
| division of labor | Separating work into specialized tasks. |
| price | The set costs of goods and services. |
| consumer sovereignty | Belief that the demand of consumers drives the economy. |
| laissez-faire | Economic philosophy that government should not regulate the economy. |
| Invisible Hand | Adam Smith's theory that a free market regulates itself to distribute goods and services fairly. |
| Communist Manifesto | Capsule statement of the philosophy of communism, written by Karl Marx and Friedrich Engels. |
| Keynesian theory | Economic view that government involvement is necessary to promote growth and stability. |
| fiscal policy | Government spending and taxation to foster economic growth and keep unemployment and prices down. |
| deficit spending | Government spending while running a budget deficit; part of a Keynesian fiscal policy. |
