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| Question | Answer |
| Economics | the study of how individuals and nations make choices about ways to use scarce resources to fulfill their needs and wants |
| wants | a thing we would like to have, such as entertainment, vacations, or an item that makes life comfortable and enjoyable |
| needs | requirements or survival, such as food, clothing, and shelter |
| scarcity | not having enough resources to produce all of the things we would like to have |
| Factors of production | resources necessary to produce goods and services |
| LAND | considered a factor of production; the use of all naturally occurring resources provided by land ex. natural water |
| LABOR | considered a factor of production; the work done by employees for the company |
| Capital | considered a factor of production; the resources used by the company and the skills gained by workers |
| Entrepreneurship | considered a factor of production; the marketing and communication by a company to the public |
| Entrepreneur | individual who starts a new business, introduces a new product, and improves a management technique |
| trade-off | the alternative you face if you decide to do one thing rather than another |
| opportunity cost | the cost of the next best alternative use of time and money when choosing to do one thing rather than another |
| Gross Domestic Product (GDP) | total dollar value of all final goods and services produced in a country during a single |
| Circular Flow Model | the flow of resources, goods and services, and money is actually circular; economists use this model to show how economic decision making in the market system works |
| factor market | a market where productive resources are bought and sold |
| product markets | a market where producers offer goods and services for sale |
| specialization | when people, businesses, regions, and/or nations concentrate on goods and services that they can produce better than anyone else |
| division of labor | the breaking down of a job into separate, smaller tasks to be performed individually |
| Adam Smith | Father of Free Enterprise |
| capitalism | a system in which private citizens own most, if not all, of the means of production and decide how to use them within legislated limits |
| free enterprise system aka market economy | economic system in which individuals and businesses are allowed to compete for profit with a minimum of government interference |
| consumer sovereignty | the role of consumer as the ruler of the market, determining what products will be produced |
| private ownership of resources | a situation in which a company is owned by private shareholders |
| competition | the struggle that goes on between buyers and sellers to get the best products at the lowest prices |
| profit motive | the driving force that encourages individuals and organizations to improve their material well-being |
| Laissez-faire economics | economic system where government should not interfere in the marketplace |
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