Scarcity
Fundamental economic problem facing all societies resulting from a combination of scarce resources and people's virtually unlimited wants.
Utility
Ability or capacity of a good or service to be useful and give satisfaction to someone.
Gross Domestic Product (GDP)
Monetary value of all final goods, services, and structures produced within a country's national borders during a one-year period
Economics
Social science dealing with how people satisfy seemingly unlimited and competing needs and wants with the careful use of scarce resources
Land
Natural resources of "gifts of nature" not created by human effort
Capital
Tools, equipment, and factories used in the production of goods and services
Labor
people with all their abilities and efforts
Entrepreneurs
Risk-taking individuals who introduce new products or services in search of profits
opportunity cost
Cost of the next best alternative use of money, time, or resources when one choice is made rather than another.
Trade-off
Alternative that must be given up when one choice is made rather than another.
Productivity
Measure of the amount of output produced in a specific time period with a given amount of resources.
Specialization
Assignment of tasks to the workers, factories, regions, or nations that can perform them most efficiently.
Factor Market
Markets in which productive resources are bought and sold.
Product Market
Market in which goods and services are bought and sold.
cost-benefit analysis
Comparison of the cost of an action to its benefits
free enterprise economy
Market economy in which privately owned businesses have the freedom to operate for a profit
Exports
The goods and services that a nation produces and then sells to other nations
Imports
The goods and services that a nation buys from other nations
comparitive advantage
Country's ability to produce a given product relatively more efficiently than another country
Tariff
Tax placed on an imported product
Embargo
Government order prohibiting the movements of goods to a country
trade deficit
Balance of payments outcome when spending on imports exceeds revenues received from exports
Trade Surplus
Situation occurring when the value of a nation's exports exceeds the value of its imports
International Monetary Fund (IMF)
International organization that offers advice, financial assistance, and currency support to all nations
World Bank
International agency that makes loans to developing countries
Globalization
Movement toward a more integrated and interdependent world economy
Outsourcing
Hiring outside firms to perform non-core operations to lower operating costs
Multinationals
Corporation producing and selling without regard to national boundaries
Cartels
Group of sellers or producers acting together to raise prices by restricting availability of a product
subsistence
State in which a society produces barely enough to support itself