PRINCIPLES OF BUSINESS, MARKETING, AND FINANCE CHAPTER 1: ECONOMIC DECISIONS AND SYSTEMS

Needs
Things required in order to live
Wants
Things that add comfort and pleasure to your life
Goods
Things that you can see and touch
Services
Activities provided for the satisfaction of others that are consumed at the same time they are produced
Economic resources / factors of production
Things available to be used to produce goods and services
Scarcity
Not having enough resources to satisfy every need
Economic decision-making
The process of choosing which needs and wants will be satisfied
Trade-off
When you give up something to have something else
Opportunity cost
The value of the next-best alternative that you were not able to choose
Economic system
The method a country uses to answer the three economic questions
Command economy
The resources are owned by the government
Market economy
The resources are owned and controlled by the people of the country
Traditional economy
Goods and services are produced the way it has always been done
Mixed economy
Combines elements of the command and market economies
Capitalism
The private ownership of economic resources by individuals, rather than by the government
Consumer
A person who buys and uses goods and services
Producers
Individuals and organizations that determine what products and services will be available for sale
Demand
The quantity of a good or service that consumers are willing and able to buy
Supply
The quantity of a good or service that businesses are willing and able to provide
Market price
The point where supply and demand are equal