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| The apportionment of resources among firms and industries to obtain the production of the products most wanted by society (consumers); the out put of each product at which its marginal cost and price or marginal benefit are equal. |
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| Human-made resources (buildings, machinery, and equipment) used to produce goods and services; goods that do not directly satisfy human wants; also called capital goods. |
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| An economic system in which property resources are privately owned and markets and prices are used to direct coordinate economic activities. |
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| The flow of resources from households to firms and of products from firms to households. These flows are accompanied by reverse flows of money from firms to households and from households to firms. |
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| A method of organizing an economy in which property resources are publicly owned and government uses central economic planning to direct and coordinate economic activities; command economy. |
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| Products and services that stisfy human wants directly. |
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| (1) An outward shift in the production possibilites curve that results from an increase in resource supplies or quality or an improvement in technology; (2) an increase of real output (gross domestic product) or real output per capita. |
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| The land, labor, capital, and entrepreneurial ability that are used in the production of goods and services; productive agents; facotrs of production. |
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| A particular set of institutional arrangements and a coordinating mechanism for solving the economizing problem; a method of organizing an economy, of which the market system and the command system are the two general types. |
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| The choices necessitated because society's economic wants for goods and services are unlimited but the resources available to satisfy these watns are limited (scarce). |
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| The human resource that combines the other resources to produce a product, makes non routine decisions, innovates, and bares risks. |
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| Economic resources: land, capital, labor, and entrepreneurial ability. |
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| (1) The use of all available resources to produce want-satisfying goods and services; (2) the situation in which the unemployment rate is equal to the full-employment unemployment rate and there is frictional and structural but no cyclical unemployment (and the real GDP of the economy equals potential output). |
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| Employment of available resources so that the maximum amount of (or total value of) goods and services is produced; occurs when both productive efficiency and allocative efficiency are realized. |
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| Spending the production and accumulation of capital and additons to inventories. |
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| People's physical and mental talents and efforts that are used to help produce goods and services. |
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| Natural resources ("free gifts of nature") used to produce goods and services. |
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| law of increasing opportunity costs |
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| The principle that as the production of a good increases, the opportunity cost of producitng an additional unit rises. |
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Definition
| All the product and resource markets of a market economy and the relationships among them; a method that allows the prices determined in those markets to allocate the economy's scarce resources and to communicate and coordinate the decisions made by consumers, firms, and resource suppliers. |
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| The amount of other products that must be forgone or sacrificed to produce a unit of product. |
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| production possibilities curve |
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| A curve showing the different combinations of two goods or services that can be produced in a full-employment, full-production economy where the available supplies of resources and technology are fixed. |
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| production possibilities table |
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| A table listing the different combinations of two products that can be produced with a specific set of resources (and with full employment and productive efficiency). |
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| The production of a good in the least costly way; occurs when production takes place at the output in which average total cost is a minimum and marginal product per dollar's worth of input is the same for all inputs. |
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| A marekt in which products are sold by firms and bought by households. |
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| A market in which households sell and firms buy resources or the services of resources. |
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| The want-satisfying power of a good or service; the satisfaction or pleasure a consumer obtains from the consumption of a good or service (or from the consumption of a collection of goods and services). |
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