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| Question | Answer |
| Economics | study of how we make decisions in a world in which resources are limited |
| Wants vs. needs | needs- required Wants- optional |
| Scarcity | whenever we do not have enough to produce all the things we would like to have. |
| Factors of Production | resources necessary to produce goods and services |
| Land | comes from the earth |
| Labor | human effort directed toward producing goods and services |
| Capital | previously manufactured goods used to make other goods and services |
| Entrepreneurship | Ownership |
| 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 |
| opprotunity 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 | total dollar value of all final goods and services produced in a country during a single year |
| Circular Flow Model | b |
| 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 preformed individually |
| Adam Smith | Father of market economy |
| Capitalism | a system in which private citizens own most, if not all, of the production and decide how to use them within legislated limits |
| free enterprise system | economic system in which individuals and businesses are allowed to compete for profit with a minimum of government interference |
| Consumer | someone who buys a good or service |
| private ownership | |
| competition | the struggle that goes on between buyers and sellers to get the best product 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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