Post on 13-Dec-2015
Thinking Like an EconomistBundle 1 Key Terms
Capitalism
• Private citizens own and use factors of production to make money.
Command Economy• Central authority
(government) makes most big economic decisions.
Cost-Benefit Analysis• Comparing the cost
of something to the benefit you get from it.
Division of Labor• Dividing work into
separate tasks to be performed by different workers.
Economic Growth• An increase in a
country’s output of goods and services.
Economics• The study of how
people use scarce resources to satisfy unlimited wants and needs.
Factors of Production• Resources needed to
produce goods; Land, capital, labor, and entrepreneurship.
Free-Enterprise System• Privately owned
businesses work to make a profit with limited government intervention.
Goods• Physical product that
is useful, transferable, and satisfies wants and needs.
Market Economy• An economic system
where supply, demand, and price help people make economic decisions.
Needs• Basic requirements
for survival, such as food, clothing, and shelter.
Opportunity Cost• Cost of the next best
alternative use of money, time, or resources.
Productivity• The amount of
output in a specific time period using a given amount of resources.
Scarcity• Economic problem
of meeting unlimited wants and needs with limited resources.
Services• Work performed for
someone else.
Socialism• Economy where
government owns some factors of production and chooses what is produced and how.
Specialization• Someone performs a
specific task and gets better at doing it. Usually as part of a larger group.
Trade-Offs• What is given up
when one choice is made instead of another.
Traditional Economy• Economy where
scarce resources or other economic activity is the result of ritual, habit, or custom.
Utility• How useful
something is.
Value• How much
something is worth.