| A | B |
|---|
| Scarcity | the inability to satisfy all wants at the same time |
| Opportunity cost | what is given up when a choice is made—i.e., the highest valued alternative is forgone |
| Demand | the amount of a good or service that consumers are willing and able to buy at a certain price |
| Production | the combining of human, natural, capital, and entrepreneurship resources to make goods or provide services |
| Consumption | the using of goods and services |
| Free market economy | Minimal government involvement in the economy |
| Traditional economy | Economic decisions are based on custom and historical precedent |
| Command economy | Central ownership (usually by government) of property/resources |
| Profit | earnings after all expenses have been paid |
| Competition | Rivalry between producers and/or between sellers of a good or service usually results in better quality goods and services at lower prices |
| Consumer sovereignty | determine through purchases what goods and services will be produced |
| Proprietorship | business organization with one owner who takes all the risks and all the profits. |
| Partnership | business organization with two or more owners who share the risks and the profits |
| Corporation | business organization that is authorized by law to act as a legal entity regardless of the number of owners |
| Entrepreneur | A person who takes a risk to produce and sell goods and services in search of profit |
| Economic flow | Resources, goods and services, and money moving continuously among households, businesses, and markets |
