| A | B |
|---|
| production possibilities curve | curve that shows alternative ways to use an economy's resources |
| opportunity cost | the most desirable alternative given up as the result of a decision |
| scarcity | limited quantities of resources to meet unlimited wants |
| economic system | method used by a society to produce and distribute goods and services |
| market economy | decisions on production and consumption of goods and services are based on voluntary exchange in markets |
| command economy | central government makes all decisions on production and consumption of goods and services |
| traditional economy | system that relies on habit, custom, or ritual to decide questions of production and consumption of goods and services |
| mixed economy | combines free market with limited government involvement |
| choice | process of judging the merits of multiple options and selecting one of them |
| availability | proportion of time a system is functioning |
| resources | anything of limited availability that needs to be consumed to obtain a benefit from it |
| efficiency | using resources in such a way as to maximize the production of goods and services |
| underutilization | using fewer resources than an economy is capable of using |
| want | item that we desire but that is not essential to survival |
| land | natural resources that are used to make goods and services |
| labor | the effort that people devote to a task for which they are paid |
| capital | any human made resource that is used to create other goods or services |
| entrepreneurship | ambitious leader who combines land, labor and capital to market new goods and services |
