| A | B |
|---|
| Economics | The study of the choices people and communities make regarding the way they produce and purchase goods and services. |
| Microeconomics | The study of the economic behavior and decision making in small units, such as households and firms. |
| Macroeconomics | The study of economic behavior and decision making in a nation’s whole economy. |
| Economic system | The structure that a society uses to produce and distribute goods and services. |
| Market economy | Suppliers produce whatever goods and services they wish and set prices based on what consumers are willing to pay. |
| Command economy | The government owns or manages the nation’s resources and business; another name for a centrally planned economy. |
| Traditional economy | The oldest and simplest economic system in which people do things as they have in the past. Economic system where customs, traditions, and cultural beliefs guide production, distribution, and consumption, often relying on subsistence activities and barter rather than money. |
| Mixed economy | A market-based economic system in which the government has some involvement. |
| Producer | Company or individual who makes or provides goods and services. |
| Consumer | Someone who buys goods and services. |
| Economic choices | Decisions made to allocate scarce resources among competing alternatives, where every choice involves trade-offs and opportunity costs. |
| Marginal cost | The cost of producing one more unit of a good. |
| Marginal benefit | The extra benefit of adding one unit. |
| Diminishing marginal utility | The additional satisfaction a consumer gains from consuming one more unit of a good or service decreases as consumption increases. |
| Scarcity | The principle that limited amounts of goods and services are available to meet unlimited wants. |
| Opportunity cost | The value of what you are willing to give up to achieve something else. |
| Tradeoffs | The alternatives that we give up when we choose one course of action over another. |
| Invisible hand | Adam Smith’s idea that competition should regulate the marketplace. |
| Factors of production | The resources that are used to make goods and services. |
| Human resources | The labor force’s collective knowledge, skills, abilities, and traits that contribute to producing goods and services. |
| Natural resources | Materials, substances, or attributes provided by nature that serve as essential inputs for producing goods and services and generate economic value. |
| Capital resources | Any human-made resource that is used to produce other goods and services. |
| Entrepreneurship | The process of starting a new business. |
| Consumer sovereignty | The power of consumers to decide what gets produced. |
| Profit motive | The incentive that drives individuals and business owners to improve their material well-being. |
| Government regulation | When a government makes rules that affect the production of a good or service. |
| Laissez faire | The idea that government should not get involved in economic matters. |
| Capitalism | An economic system based on the private ownership of the means of production and its use for the purpose of obtaining profit. |
| Unintended consequences | The unexpected outcomes of economic actions, policies, or decisions that were not foreseen or intended when they were implemented. |
