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Ch. 1
Economic Decisions and Systems
| Term | Definition |
|---|---|
| Needs | Things that are required in order to live |
| Wants | Things that add comfort and pleasure to your life |
| Goods | Things that you can see and touch |
| Services | Activities that are consumed at the same time they are produced |
| Economic Resources | The means through which goods and services are produced |
| Factors of Production | What Economic Resources are called |
| Natural Resources | Raw materials supplied by nature |
| Human Resources | People who produce goods and services |
| Entrepreneur | Risk taker who uses resources in an entirely new way to create a new product or service |
| Capital Resources | The products and money used in the production of goods and services |
| The Basic Economic Problem | The mismatch of unlimited wants and needs and limited economic resources |
| Scarcity | Not having enough resources to satisfy every need |
| Choices | Decisions among the alternatives |
| Economic Decision-Making | The process of choosing which wants, among several options, will be satisfied |
| Trade-Off | When you give up something to have something else |
| Opportunity Cost | The value of the next-best alternative that you did not choose |
| Economic System | A nation's plan for answering the three economic questions |
| Command Economy | The resources are owned and controlled by the government |
| Market Economy | The resources are owned and controlled by people of the country |
| Marketplace | Anywhere that goods and services exchange hands |
| Traditional Economy | Goods and services are produced the way it has always been done |
| Mixed Economy | Combines Elements of the command and market economies |
| Capitalism | Refers to the private owner-ship of resources by individuals, rather then by the government |
| Free Enterprise or Private Enterprise | Freedom of production and consumption decisions lends itself to another name associated with the U.S. economy |
| Private Property | Means you can own, use, or dispose of things of value |
| Freedom of Choice | Means that you can make decisions independently and must accept the consequences of those decisions |
| Profit | The money left from sales after all of the costs of operating a business have been paid |
| Competition | The rivalry among businesses to sell their goods and services |
| Consumer | A person who buys and uses goods and services |
| Producer | Individuals and organizations that determine what products and services will be available for sale |
| Demand | The quantity of a good or service that consumers are willing and able to buy |
| Supply | Refers to the quantity of a good or service that businesses are willing and able to provide |
| Supply Curve | A product illustrates the relationship between the price of the product and the quantity businesses will supply |
| Competitors | Businesses offering very similar products to the same customers |
| Market Price | The point where supply and demand are equal |
Created by:
meaganwilcox
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