| A | B |
|---|
| Wants | goods and services that people would like to obtain |
| Needs | items that people must have to live; food, water, shelter, basic clothing |
| Scarcity | condition that exists because human wants and needs are greater than available resources |
| Incentives | positive and negative rewards that encourage economic behavior such as making purchases or working to increase productivity |
| Resources | items available to produce goods and services to satisfy human wants and needs. |
| Opportunity Costs | the item or value that is lost when someone makes an economic decision; the next best alternative; the item that is not chosen |
| Trade Offs | action of giving up one item or category for another; example, "guns vs butter" |
| Factors of Production | land, labor, capital, and entrepreneurship |
| Land | the earth and all of the resources coming from the land |
| Labor | efforts and abilities of humans used to produce goods and services, mental and physical |
| Capital | tools, equipment, and facilities involved in creating goods and services and getting them to the consumers |
| Financial capital | money from savings and investments that finance businesses |
| Entrepreneur | person or individual who organizes the resources for production and distribution, entrepreneurs take risks |
| Allocation | the way society deals with scarcity; prices, government regulation, rationing |
| Decision Making | choosing between two or more economic options |
| Marginal benefits and costs | what consumers and producers evaluate in making economic decisions; benefits should be greater than costs |
| Marginal utility | the satisfaction and usefulness of adding one unit in production or one more item in consumption |
| Consumer | Those who obtain and use goods and services produced by others. |
| Product (Producer, Production) | an economic good that can be used to satisfy needs and wants |
| Service | work performed to satisfy needs and wants, example, haircut |
| Specialization | individuals do specific tasks in the production of goods and services, ex. Heart specialist. |
| Voluntary Exchange | consumers and producers decide which goods and services to exchange and set the prices |
| Absolute Advantage | one person or country can produce more than another in a specific time period; measured in terms of inputs and outputs. |
| Comparative Advantage | one person or country has a lower opportunity cost in the production of one good or service over another good or service. |
