Glossary of Key Terms command economy. A system in which a central authority, usually the government, controls economic activities. consumer. A buyer and user of goods and services. demand. The quantity of a product or service consumers are willing to buy. economic system. Structure in which resources are turned into goods and services to address unlimited needs and wants. Back Chapter 1 Vocabulary

Glossary of Key Terms free enterprise system. See market economy. Also called capitalism. goods. Physical items such as food and clothing. human resource. Qualities and characteristics that people have within themselves. innovation. The process of creating something—new or improved products and new ways to do things and solve problems. Back Chapter 1 Vocabulary

Glossary of Key Terms market economy. A system in which privately owned businesses operate and compete for profits with limited government regulation or interference. marketplace. An arena in which consumers and producers meet to exchange goods, services, and money. mixed economy. A combination of market and command systems. Back Chapter 1 Vocabulary

Glossary of Key Terms needs. Items a person must have to survive. nonhuman resource. External resources, such as money, time, equipment, and possessions. opportunity cost. The value of the best option or alternative given up. producer. An individual or business that provides the supply of goods and services to meet consumer demands. profit. The total amount of money earned after expenses are subtracted from income. Back Chapter 1 Vocabulary

Glossary of Key Terms resources. Any input used to generate other goods or services. scarcity. The challenge of stretching resources to cover needs and wants. services. Work performed. supply. The amount of a product or service producers are willing to provide. technology. The application of scientific knowledge to practical uses and product development. Back Chapter 1 Vocabulary

Glossary of Key Terms trade-off. Part of making choices that involves evaluating two or more options and selecting just one; the item given up in order to gain something else. traditional economy. System in which economic decisions are based on a society’s values, culture, and customs. wants. Items a person would like to have that are not essential to life. Back Chapter 1 Vocabulary