1. Unit 1 - Vocabulary

2. Economics
The study of production, distribution, and consumption of goods and services with a society.
It is the study of how people (individuals and groups) make choices and decisions with limited resources to satisfy wants, needs, and desires.

3. Allocate
To Distribute

4. Capital
Tools, machines, knowledge, etc. used to produce goods and services
Human Capital - The skills and knowledge gained by a worker through education and experience
Physical Capital - Man-made factors of production such as machinery, factories, roads, etc.

5. Command economy
An economic system in which the government makes all economic decisions.

6. Competition
A rivalry between two or more businesses trying to sell products to the same customer or market

7. Consumer
A person who purchases goods and services for personal use

8. Consumer sovereignty
the power of consumers to decide what gets produced

9. Division of labor
Division of work into a number of separate tasks to be performed by different workers

10. Entrepreneur
A person who organizes, manages, and takes on the risks of a business.

11. Factors of Production
All the economic resources necessary to produce a society's goods and services.

12. Good
An physical item that people buy.

13. Government deregulation
The deletion, abandonment, or relaxation of various laws, rules, and regulations that affect business and industry.

14. Government regulation
the act of controlling business behavior through a set of rules or laws

15. Incentive
A reason or reward that motivates people to behave in predictable ways

16. Income redistribution
Governments methods of moving incomes from rich people to poor people (taxes and benefits)

17. Input
Anything (including a resource) used to produce a good or service

18. Labor
Human effort directed toward producing goods and services

19. Land
All natural resources

20. Marginal
Additional

21. Marginal Benefit
The additional benefit to a consumer from consuming one more unit of a good or service

22. Marginal Cost
The additional economic cost of the producing the next unit of good or services

23. Market economy
An economic system in which people choose freely what to buy and sell

24. Market failure
A situation in which the market does not distribute resources efficiently

25. Mixed economy
market-based economy system with limited government involvement.

26. Opportunity Cost
The best alternative that we forgo, or give up, when we make a choice or decision.
There is only one opportunity cost.

27. Output
The result of an activity.

28. Paradox of Value
The situation where some necessities, such as water, have little monetary value compared to non-necessities, such as diamonds.

29. Producer
a person who makes products or provides services that are used by other people.

30. Production Possibilities Curve
A diagram representing various combinations of goods and services an economy can produce.

31. Productivity
a measure of the amount of output based on the amount of inputs used

32. Rational Decision Making
When the marginal benefits equal or outweigh the marginal costs.
MB > MC

33. Scarcity
the condition of not being able to have all the goods and services one wants. The fundamental economic problem.

34. Service
Actions or activities that one person performs for another

35. Specialization
In production a system in which each worker performs a single part of an entire process

36. 3 Economic questions What to produce? How to produce?
For whom to produce?

37. Trade-off
All alternatives that must be given up when one choice is made over another

38. Utility Benefits or customer value received by users of the product
usefulness

39. Voluntary Exchange
A trade in which the parties involved anticipate that the benefits will outweigh the costs
Non-fraudulent – everyone has “perfect” information