| A | B |
|---|
| laissez faire | economic system in which the govt minimizes its interference in the economy |
| market economy | economic system in which decision are made by indiviiduals rather than govt |
| command economy | economic system in which decisions are made by the government |
| competition | rivalry among producers to win business |
| standard of living | the material well being of an individual group or nation |
| profit incentive | desire to make money that motivates peopel to produce and sell goods and services |
| profit | money left over after all the costs of production have been paid |
| mixed economy | economic system that combines features of market economy and command economy |
| traditional economy | economic system in which decision are based on customs |
| Adam Smith | founder of modern capitalist economics |
| wrote Wealth of Nations | Adam Smith |
| capitalist system | another term for market economy |
| market | freely chosen activity between buyers and sellers |
| economic growth | expansion of the economy to prodcute more goods, jobs and wealth |
| free enterprise | system by which individuals may own and control the factors of production |
| private property | goods owned by indiviuals and groups and not by govts. |
| invisible hand | term used by Adam Smith to describe the effect of competition in guiding idvividuals toward workign for their own self interest thereby achieving the maximum good for society |
| proletariat | the working class |
| bourgeoisie | owners or capitalists; upper class |
| Das Kapital | Marx's book about capitalism |
| Wealth of Nations | Adam Smith's book about the importance of competition |
| economics | study of how people make choices about use resources to satify their wants & needs |
| scarcity | condition that occurs when wants are greater than the resources to satisfy them |
| factors of production | resources used to produce goods & services |
| land | surface land & water & natural resources that each contain |
| labor | the human effort that is required to produce goods & services |
| capital | manufactured goods that are used to produce other goods or services |
| entrepreneurship | ability of risk-taking individuals to start new businesses or develop new products and processes in hopes of making profits larger |
| trade off | acrificing 1 good or service to purchase or produce another |
| opportunity cost | value of the second-best choice that is given up when the first choice is chosen |
| prod. possibilies curve | a graph that shows the greatest combination of goods and services that can be produced from a specific amt. of resource in a set period of time |
| shortage | a TEMPORARY situation that occurs when resources are temporarily unavailable |
| macroeconomics | is the study of economy-wide phenomena, including inflation, unemployment, and economic growth. |
| microeconomics | is the study of how households and firms make decisions and how they interact in markets. |
| Circular-Flow Diagram | models such as the : a visual model of the economy, shows how dollars flow through markets among households and firms |
