efficiency 

use of resources in a way that maximizes output of goods and services 

goods 

physical objects that can be exchanged 

Trade-off 

an alternative that we scrifice when we make a decision 

production possibilities graph 

representation of alternative ways to  use an economy's resources 

scarcity 

limited quantities of resources to meet unlimited

needs or desires 

services 

actions or activites that on erson performs

for another 

standard of living 

level of economic prosperity 

product market 

households purchase the goods and services that  firms produce 

economic system 

method used by society to produce and distrbute goods and services 

shortage 

a situation where a good aor service is not

available 

opportunity cost 

most desirable alternative given up 

underutilization 

use of fewer resources than the econ is

capable of using 

labor 

paid effort that people devote to a task 

factors of production 

Land, labor and captial 

self-interest 

one's personal gain 

safety net 

gov't action to protect those in times

of econ. difficulty 

factor payments 

$ received for providing the factors of

production

the income people receive for suppling

the factors of production 

substitution effect 

total revenue 

normal good 

As income increases, so does demand for these

goods

inferior good 

as income increases, demad for these goods

decreases

demand curve 

a graphical representation of the demand

schedule - which shows how much

consumers are willing to pruchase at each price

ceteris paribus

Latin term meaning all other things held

constant

law of demand 

idea that as price increases,

demand decreased as price decreases, demand

increases

complement 

two goods that are typically

purchased together

substitue 

goods that are interchangable as the price

of 1 item an alternative good is purchased

factor payments 

market supply curve 

graphical representation of the marke supply schedule - shows how much all suppliers are

willing to  provide at each price

regulation 

gov't interaction in businesses that typically increases the cost of production

quantily supplied 

the amount of a good suppliers are willing

to supply at certain prices

supply schedule 

shows how much a supplier is willing

to supply at certain prices