Wants - Economists term for everything people desire beyond basic goods and services that meet their needs.
Needs - Necessary to live.
Scarcity - State in which people do not and cannot have enough income, time, or other resources to satisfy their every desire.
Trade Off - Exchanging one thing for the use of another.
Opportunity Cost - Value of the next best alternative given.
Land - Refers to natural resources and surface land.
Labor - Work people do.
Capital - All property used in the production of other goods.
Entrepreneurship - Ability to start a new business.
What To Produce - Decision made by the government.
How Much To Produce - The government decides.
Who Should Share In What Is Produced - The government/congress decides.
Free Enterprise - Capitalism.
Traditional Economy System - All decisions are based on customs or beliefs.
Command/Controlled Economy - System in which the government controls all factors of production.
Market/Capitalistic Economy - The government doesn't influence in this type of economy.
Mixed Economy - System combining characteristics of more than one type of economy.
Circular Flow Chart - Model that shows income flowing between businesses and consumers.
Free Choice - Buyers make the decisions about what should be produced.
Private Property - What is owned by individuals.
Profit Incentive - Desire to make profit.
Competition - Rivalry among producers.
Adam Smith - Believed that individuals, seeking profit, direct their resources more efficiently than governments.
Invisible Hand Theory - Individuals not bothered by the government would work for their own self-interests.
Microeconomics:.
Law Of Demand - How people react to changing prices in terms of the quantities of a good or service that they produce.
Law Of Supply - As the prices rise, so does the quantity supplied.
Shortage - The quantity demanded is greater than what is supplied.
Surplus - Extra product.
Sole Proprietorship - A business owned by one person.