| A | B |
|---|
| scarcity | Not enough for everyone to have due to lack of resources. |
| price | Value assigned according to supply and demand. |
| Law of Supply | Idea that suppliers will supply more of a product as the price increases |
| Law of Demand | Idea that buyers will want more of a product as the price decreases. |
| market price | point where the supply curve and demand curve meet, creating the value of a product. |
| shortage | When demand is temporarily greater than supply - price usually increases. |
| surplus | When supply is greater than demand - price usually decreases. |
| diminishing utility | Idea that a person's demand for a product will reach a maximum no matter the price. |
| diminishing return | idea that a supplier will reach a point when increased production will not increase profits. |
| productivity | Amount of work produced in a given time. |
| comparative advantage | When one nation produces a product better or cheaper. |
| division of labor | Splitting jobs into individual tasks in order to increase productivity. |
| economies of scale | idea that a larger business can operate more efficiently because of its bulk. |
| opportunity cost | What you lose when you make a choice of one thing over the other. |
| trade off | The choice you make of one thing over the other. |
| factors of production | Land, labor, resources and management. |
| capital | Money used to start or run a business. |
| capital goods | Machines or tools used to produce other goods. |
| traditional economy | Economy where almost everything is made by hand. |
| command economy | System where government is in control of all factors of production. |
| market economy | Economic situation where individuals make most of the choices. (capitalism) |
| mixed economy | Economic situation where individuals and government share the power over economic decisions with individuals owning smaller businesses and government owning the largest. |
| laissez faire economics | Economic system where the government takes a hands-off policy as proposed by Adam Smith. |
| capitalism | Another name for the market economy where individuals risk their capital for a chance to gain profit. |
