| A | B |
|---|
| economics | study of how people make choices about use resources to satisfy 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 |
| productivity | amount of goods and services that results from the use of a set amount of resources |
| entrepreneurship | ability of risk-taking individuals to start new businesses or develop new products and processes in hopes of making profits larger |
| technology | advances in knowledge that lead to new/improved goods & services & better ways of producing them |
| trade-off | sacrificing 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 |
| economic model | simplified representation to explain & predict economic behavior in the real world |
| hypothesis | an educated guess or prediction that is based on known facts and which must be tested to determine if it is true |
| want | things people would like to have |
| resource | anything that can be used to make goods or services |
| traditional economy | an economic system in which major economic decisions are based on custom and habit |
| market economy | an economic system in which people and businesses own all resources and make economic decisions on the basis of price |
| command economy | an economic system in which the govt makes the major economic decisions |
| mixed marked economy | an economy inwhich businesses and individuals make the major economic decisions but in which the gov and plays role |
| fixed cost | an expense that does not change no matter how much a business produces |
| variable cost | an expense that changes depending on how much a business produces |
| total cost | the sum of all fixed and variable costs |
| marginal cost | the additional expense of producing one more unit of something |
| marginal revenue | the additional income received from selling one more unit of something |
| revenue | the money a business gets from selling a good or service |
| benefit cost analysis | a comparison of costs and revenue of a decision |
| The United States | mixed market econom |
| Communist Countries | command economy |
| subistence farming in 3rd world countries | traditional economy |
| consumer | a person who buys a good |
| producer | a person or business who provides a good or service |
| demand | the amount of a good or service that consumers are willing and able to buy over a range of prices |
| supply | the amount of a good or service that producers are willing and able to sell over a range of prices |
| market | a place where buyers and sellers come together |
| competition | struggle among sellers to attract buyers |
| equilibrium price | the price set for a good or service in the market place at which deamnd and supply are balanced |
| surplus | a situation in which supply is greater than demand |
| shortage | a situation in which demand is greater than supply |
| elasticity of demand | s when price or other factors have a big effect on the quantity consumers want to buy |
| As price goes up.... | demand goes down |
| As price goes down | demand goes up |
| Supply goes up | as the price goes up |
| Supply goes down | as the price goes down |
| substitution effect | if you buy Sam's Cola instead of Coke |
| inelastic demand | A situation in which the demand for a product does not increase or decrease correspondingly with a fall or rise in its price |
