need
something essential for survival
want
something that people desire but that is not necessary for survival
goods
the physical objects that someone produces
services
the actions or activities that one person performs for another
scarcity
the principle that limited amounts of goods and services are available to meet unlimited wants
economics
The study of how people seek to satisfy their needs and wants by making choices
factors of production
the resources that are used to make goods and services
land
all natural resources used to produce goods and services
labor
the effect people devote to tasks for which they are paid
capital
any human-made resource that is used to produce other goods and services
guns or butter
a phrase expressing the idea that a country that decides to produce more military goods ("guns") has fewer resources to produce consumer goods ("butter") and vice versa
opportunity costs
the cost of operating a facility, such as a factory or store
cost-beneft analysis
a decision-making process in which you compare what you will sacrifice and gain by a specific action
production possibilities curve
a graph that shows alternative ways to use an economy's productive resources
efficiency
the use of resources is such a way as to maximize the output of goods and services
Underutilization
the use of fewer resources than an economy is capable of using
economic system
the structure of methods and principles that a society uses to produce and distribute goods and services
safety net
a set of government programs that protect people who face unfavorable economic conditions
market
any arrangement that allows buyers and sellers to exchange things
free market economy
an economic system in which decisions on the three key economic questions are based on voluntary exchange in markets
invisible hand
a term coined by Adam Smith to describe the self-regulating nature of the marketplace
centrally planned economy
an economy in which the government decides how economic resources will be allocated
socialism
a range of economic and political systems based on the belief that wealth should be distributed evenly throughout a society
communism
A political system in which the government owns and controls all resources and means of production and makes all economic decisions
authorization
describing a form of government that limits individual freedoms and requires strict obedience froms its citizens
Laissez-faire
the doctrine that government generally should not intervene in the marketplace
mixed economy
a market-based economic system in which the government is involved to some extent
free enterprise system
an economic system characterized by private or corporate ownership of capital goods
interest group
a private organization that tries to persuade public officials to act according to group members
public disclosure laws
laws requiring companies to provide information about their products or services
Macroeconomics
the study of economic behavior and decision-making in a nation's whole economy
Microeconomics
the study of the economic behavior and decision making of small units, such as households and firms
public good
a shared good or service for which it would be impractical to make consumers pay individually and to exclude nonpayers
infrastructure
the basic facilities that are necessary for a society to function and grow
externality
an economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume