| A | B |
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| economics | the study of how we make decisions in a world in which resources are limited |
| resource | supply of money, materials, staff, and other assets that can be drawn on by a person or organization in order to function effectively |
| scarcity | economic idea that there are not enough resources for everyone to have whatever they want. It gives resources value. |
| economic system | the way a society organizes the production and consumption of good and services |
| traditional economy | primitive-type economy based on hand production, bartering and trading. |
| market economy | economic system in which production and prices are determined by unrestricted competition between privately owned businesses |
| command economy | economy in which production, investment, prices, and incomes are determined centrally by a government |
| mixed market economy | economic system that combines aspects of both capitalism and socialism |
| trade-off | economic decision where you make a compromise between two choices |
| opportunity cost | the second choice that you no longer get to do when you make a choice |
| fixed costs | business costs or expenses that are the same no matter how many units of a good are produced |
| variable costs | business expenses that change with the number of items produced |
| total costs | what you get when you add fixed costs with variable costs in a business |
| marginal cost | the additional cost of producing one additional unit of output |
| revenue | money coming in to a business |
| marginal revenue | the change in total revenue that result from selling one more unit of output |
| cost-benefit analysis | rational decision making by weighing the cost to the benefit of our decisions |
| GDP | Gross Domestic Product - Total value in dollars of all FINAL goods and services produced in a country during a single year |
| standard of living | the degree of wealth and material comfort available to a person or community |
| division of labor | breaking down a big job into smaller task performed by different workers to increase efficiency |
| human capital | economic value of a worker's experience and skills |
| capitalism | economic system in which private citizens own and use the factors of production in order to seek a profit |
| free enterprise | freedom of individuals and businesses to operate and compete with a minimum of government interference or regulation |
| voluntary exchange | market economies are based on this |
| profit motive | the desire for financial gain as an incentive in economic activity |
| private property rights | freedom to own and use, or dispose of our own property |
| laissez faire economics | means to "let alone": idea that governments should not interfere with the marketplace |
