opportunity cost

the most desirable alternative given up as the result of a decision

Scarcity

A situation in which unlimited wants exceed the limited resources available to fulfill those wants

factors of production

Land, labor, and capital; the three groups of resources that are used to make all goods and services

Land

all natural resources used to produce goods and services

Labor

Human effort directed toward producing goods and services

physical capital

the human-made objects used to create other goods and services

human capital

the skills and knowledge gained by a worker through education and experience

Entrepreneurship

Accepting the risk of starting and running a business.

competition

the struggle between organisms to survive in a habitat with limited resources

market economy

Economic decisions are made by individuals or the open market.

command economy

An economic system in which the government controls a country's economy.

3 questions of an economic system

1. what and how much should be produced?2. how goods and services should be produced?3. who gets the goods and services produced?

Public good

a shared good or service for which it would be impractical to make consumers pay individually and to exclude nonpayers

Safety net

government programs that protect people experiencing unfavorable economic conditions

marginal cost

the cost of producing one more unit of a good

marginal benefit

the additional benefit to a consumer from consuming one more unit of a good or service

economic efficiency

a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and in which the sum of consumer surplus and producer surplus is at a maximum

absolute advantage

the ability to produce a good using fewer inputs than another producer

comparative advantage

the ability to produce a good at a lower opportunity cost than another producer