Economics Unit 1 Flashcards
Economics
The study of how people seek to satisfy their needs and wants by making choices.
Need
Something like air, food, or shelter is necessary for production
Want
An item that we desire but that is not essential to survival.
Scarcity
Limited quantities of resources to meet unlimited wants
Factors of production
Land, labor, or capital
Land
Natural resources that are used to make goods and services
Labor
The efforts that people devote to a task for which they are paid
Capital
Any human made resource that is used to create other goods or services
Entrepreneur
Ambitious leader who combines land, labor, and capital to create and market new goods or services
Opportunity Cost
The most desirable alternative given up as a store or factory
Economic System
The method used by a society to produce and distribute goods and services
Market Economy
Economic system in which decisions on production and consumption of goods and services are based on voluntary exchange in markets
Centrally Planned Economy
Economic system in which the central government makes all decisions on the production of consumption of goods and services
Mixed Economy
Economic system that combines free market with limited government involvement
Efficiency
Using resources in such way as to maximize the production of goods and services
