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| People who decide how to combine resources to create new goods and services |
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| Land, Labor, Capital, Entrepreneurship |
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| human made resources used to produce other goods and services |
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| knowledge and skills a worker gains through education and experience |
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| act of giving up one benefit in order to gain another greater benefit |
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| used to describe one of the common choices facing governments; the choice between spending money on military or domestic needs |
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| the most desirable alternative somebody gives up as the result of a decision |
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| when you decide how much more or less to do |
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| extra cost of adding one unit |
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| the extra benefit of adding the same unit |
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Term
| Production possibilities curve |
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Definition
| graph that shows alternative ways to use an economy's productive resources |
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| Production possibiliies frontier |
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Definition
| a line on a production possibilities curve that shows the maximum possible output an economy can produce |
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Definition
| use of fewer resources than the economy is capable of using |
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| economic principal which states that as production shifts from making one good or service to another, more resources are needed to increase production of the second good or service |
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| concentration of the productive efforts of individuals and businesses on a limited number of activities |
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| arena of exchange in which firms purchase he factors of producion from households |
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| arena in which households buy he goods and services that the firms produce |
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| individuals own personal gain |
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| Describes the self-regulating nature of the marketplace. Need self-interest and competition. |
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Definition
| power of consumers to decide what gets produced |
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Term
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| Free Market, True Capitalism, Free Enerprise, Laissez Faire, private ownership(incentives) competition, consumers determine production, individuals own factors of production, Government stays out of the economy |
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| Four Pillars of Free Enterprise |
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Definition
| Private property, Price system, Market competition, entrepreneurship |
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Term
| Centrally Planned Economy |
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Definition
| Government determines producion and owns everything. Good- Gov. can influence economy greatly, Basic needs met, low prices, no umemployment, more Gov. services, use resources more efficiently. Bad- No choices, no competition, Gov. monopoly, no incentive, Gov. is bad everything is bad. |
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