| A | B |
|---|
| Comparative Advantage | Describing the situation when one nation produces a product better or cheaper than other nations. |
| Division of Labor | Idea of dividing labor into individual tasks in order to increase productivity. |
| Economic of Scale | Economic idea that a larger business can operate at a more efficient rate because of its bulk. Same concept applies when buying items in large quantities. |
| Opportunity Cost | Economic idea that a person loses the chance to do something when you make a choice. |
| Trade Off | Economic Idea that you deliberately make a decision and do so knowing the other options would be lost. |
| Factors of Production | Land, Labor, Resources, Management |
| Capital | Money used to start or run a business |
| Capital Goods | Machines or tools that are used to produce other goods. |
| Traditional Economy | Primitive economy where almost everything is made by hand. |
| Command Economy | Economic situation where the govt. is in control of the factors of production. |
| Market Economy | Economic situation where individuals make most of the choices. |
| Mixed Economy | Economic situation where individuals and govt. share the power over economic decisions with individuals owning smaller businesses and govt. owning the largest. |
| Laissez Faire Economics | Ecomonic system where the govt. 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 a profit. |
| Sole Proprietorship | Business that is owned by one individual--most common form of business in the United States. |
