| A | B |
|---|
| scarcity | basic condition that exists when unlimited wants exceed limited resources |
| land | natural resources factor of production |
| labor | human resources factor of production |
| capital | machines or tools used for production |
| human capital | investments in education or training of workers |
| entrepreneurship | factor of production that combines land, labor and capital together; starting a business |
| opportunity cost | value of the next best alternative when individuals make choices |
| trade-off | alternative choice |
| circular flow diagram | a model that demonstrates the movement of goods and money throughout an economy |
| product market | where goods and services are bought and sold |
| factor market | where land, labor, and capital are bought and sold |
| money-medium of exchage | you can spend it |
| money-store of value | you can save it |
| money-standard of value | you can compare prices |
| rent | money paid for land |
| interest | money paid for capital |
| profit | money for entrepreneurship |
| wages | money paid for labor |
| standard of living | level of goods and services (or wealth) owned by a person in a particular country |
| productivity | relationship of inputs to outputs |
| investment | money, time, or other resources used to increase productivity |
| production possibilities curve | a graph that demonstrates trade-offs and opportunity costs of two options |
| marginal benefits | additional resources gained by taking an action, like revenue earned by business when hiring one more worker |
| marginal costs | additional cost of an action, like the wages paid by business when hiring one more worker |
