1. Thinking Like an Economist Bundle 1 Key Terms

2. Capitalism Private citizens own and use factors of production to make money.

3. Command Economy Central authority (government) makes most big economic decisions.

4. Cost-Benefit Analysis Comparing the cost of something to the benefit you get from it.

5. Division of Labor Dividing work into separate tasks to be performed by different workers.

6. Economic Growth An increase in a country’s output of goods and services.

7. Economics The study of how people use scarce resources to satisfy unlimited wants and needs.

8. Factors of Production Resources needed to produce goods; Land, capital, labor, and entrepreneurship.

9. Free-Enterprise System Privately owned businesses work to make a profit with limited government intervention.

10. Goods Physical product that is useful, transferable, and satisfies wants and needs.

11. Market Economy An economic system where supply, demand, and price help people make economic decisions.

12. Needs Basic requirements for survival, such as food, clothing, and shelter.

13. Opportunity Cost Cost of the next best alternative use of money, time, or resources.

14. Productivity The amount of output in a specific time period using a given amount of resources.

15. Scarcity Economic problem of meeting unlimited wants and needs with limited resources.

16. Services Work performed for someone else.

17. Socialism Economy where government owns some factors of production and chooses what is produced and how.

18. Specialization Someone performs a specific task and gets better at doing it. Usually as part of a larger group.

19. Trade-Offs What is given up when one choice is made instead of another.

20. Traditional Economy Economy where scarce resources or other economic activity is the result of ritual, habit, or custom.

21. Utility How useful something is.

22. Value How much something is worth.