| A | B |
|---|
| Economic System | The method used by a society to produce and distribute goods and services. |
| Factor Payments | The income people recieve for supplying factors of production, such as land, labor or capital. |
| Patriotism | The love of one's country; the passion that inspires a person to serve his or her country. |
| Safety Net | Government programs that protect people experiencing unfavorable economic conditions. |
| Standard of Living | Level of economic prosperity. |
| Traditional Economy | Economic system that relies on habit, custom or ritual to decide questions of production and consumption of goods and services. |
| Market Economy | Economic System in which decisions on production and consumption of goods and services are based on voluntary exchange in markets. |
| Centrally Planned (Command) Economy | Economic system in which the central government makes all decisions on the production and consumption of goods and services. |
| Mixed Economy | Market based economic system with limited government involvement. |
| Market | An arrangement that allows buyers and sellers to exchange things. |
| Specialization | The concentration of the productive efforts of individuals and firms on a limited number of activities. |
| Household | A person or group of people living in the same residence. |
| Firm | An organization that uses resources to produce a product which it then sells. |
| Factor Market | Market in which firms purchase the factors of production from households. |
| Profit | The financial gain made in a transaction. |
| Product Market | The market in which households purchase the goods and services that firms produce. |
| Self-Interest | One's own personal gain. |
| Incentive | An expectation that encourages people to behave a certain way. |
| Competition | The struggle among producers for the dollars of the consumers. |
| Invisible Hand | Term economists use to describe the self-regulating nature of the marketplace. |
| Consumer Sovereignty | The power of consumers to decide what gets produced. |
| Communism | A political and economic system characterized by a centrally planned economy and political power resting in the hands of the central government. |
| Authoritarian | Requiring strict obedience to authority; dictatorship |
| Collective | Large farm leased from the state to groups of peasant farmers. |
| Heavy Industry | Industry that requires a large capital investment and that produces items used in other industries. |
| Laissez-Faire | The doctrine that states that government generally should not intervene in the marketplace. |
| Private Property | Property owned by individuals or companies, not by the government or the people as a whole. |
| Free Enterprise | An economic system characterized by private or corporate ownership of capital goods; investments that are determined by private decision rather than by state control and determined in a free market. |
| Continuum | A range with no clear divisions. |
| Transition | Period of change in which an economy moves away from a centrally planned economy toward a market-based system. |
| Privatize | To sell state-run firms to individuals. |
| captial | Any human-made resource that is used to create other goods or services. |
| cost | To an economist, cost is an alternative that is given up as the result of a decision. |
| economics | The study of how people satisfy their needs and wants by making choices. (Textbook definition) A social science concerned with the way society chooses to employ its limited resources, which have alternative uses, to produce goods and services for present and future consumption. (Class definition) |
| efficiency | Using resources in such a way as to maximize the production of goods and services. |
| entrepreneur | Leader who combines land, labor and capital to create and market new goods or services. |
| factors of production | Land, labor and captial; the three groups of resources that are used to make all goods and services. |
| goods | Physical objects such as clothes or shoes. |
| guns or butter | A phrase that refers to the trade-off that nations face when choosing whether to prodece more or less military or consumer goods. |
| human capital | The skills and knowledge gained by workers through education and experience. |
| labor | The effort that people devote to a task for which they are paid. |
| land | Natural resources that are used to make goods and services. |
| law of increasing costs | As we shift factors of production from making one good or service to another, the cost of producing the second item increases. |
| need | Something like air, food or shelter that is necessary for survival. |
| opportunity costs | The most desireable alternative given up as a result of a decision. |
| physical capital | All human-made goods that are used to produce other goods and sercies; tools and buildings |
| production possibilities curve (PPC) | A curve that shows alternative ways to use an economy's resources. |
| scarcity | Limited quantities of resources to meet unlimited wants. |
| services | Actions or activities one person performs for another. |
| shortage | A situation in which a good or service is unavailable, or a situation in which the quantity supplied, also known as excess demand. |
| thinking at the margin | Deciding whether to do or use one additional unit of some resource. |
| trade-off | An alternative we sacrifice when we make a decision |
| underutilization | Using fewer resources than an economy is capable of using. |
| want | An item that we desire but that is not essential to survival. |
| capitalism | An economic system in which a county's trade and industry are controlled by private business, rather than the government. |
| democracy | A political system where the people rule, either directly or though elected representatives. |
| American dream | The traditional social values of the United States, such as equality, prosperity and democracy. |
| Meritocracy | The holding of power by people selected on the basis of their ability. |
| consumer | A person that uses products or services, especially for personal needs. |
