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Economics

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Making choices and satisfying the wants and needs of consumers. Economics studies how individuals and societies seek to satisfy needs and wants through incentives, choices, and allocation of scarce resources.

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Scarcity

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The condition that exists when wants exceed resources available to satisfy wants.

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Capital Resources

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Goods produced and used to make other goods and services.

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Natural Resources

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“Gifts of nature” that are present without human intervention (ex. land)

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Human Resources

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The knowledge, efforts, and skills people bring to their work, also known as labor.

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Entrepreneurial Resources

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The initiative to improve goods and services or create new ones.

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Command Economy

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Economic system that is run by a central government or authority

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Market economy

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Characterized by private ownership of the means of production (for example, farms and factories), and supply and demand are responsible for the price and allocation decisions.  Individuals decide what, how and for whom goods and services are produced.

 

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Socialist economy

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Characterized by more government ownership and central planning.  Government, which relies on tax revenues, is far less likely than private businesses to heed price signals or to feel the discipline imposed by market forces.

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Mixed Economy

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A combination of a command and market economy.