Economics Introduction Vocabulary Part 1 of 2

Part 1 - Quiz date: ______

Directions: On this sheet, copy the definitions from the SMART Board as we review them in class. Use a separate sheet of paper if necessary. These words are due on the day of the Part 2 Quiz.

1) economics - how people seek to satisfy their needs & wants by making choices 2) scarcity - not enough 3) factors of production - resources used to make things 4) entrepreneur - ambitious person who combines land, labor, & capital to create a product people want or need 5) trade-off things given up when a decision is made 6) opportunity cost - the most desirable alternative given up as the result of a decision 7) efficiency - using resources wisely 8) production possibilities frontier - the line on a production possibilities curve that shows the maximum possible output 9) economic system - the way a society makes and distributes goods and services 10) market economy - economic system guided by decisions made in the market 11) competition - contest among sellers to get consumers to buy their products 12) laissez faire - the government should stay out of the affairs of business 13) consumer - buyer, user 14) consumer sovereignty - consumers decide what gets produced 15) profit motive - the force that encourages people and organizations to improve their material well-being 16) voluntary exchange - people decide what and when they want to buy and sell 17) macroeconomics - the behavior and decision making of large economic units 18) microeconomics - the behavior and decision making of economic small units 19) gross domestic product - the total value of all final goods and services produced in a particular economy in a year 20) business cycle the economy has ups and downs

21) law of demand - consumers buy more when prices are lower 22) elasticity of demand - how buyers react to a change in price 23) law of supply businesses supply more when market price is higher 24) elasticity of supply how a business reacts to a change in market price 25) gross national product - the annual income earned by U.S.-owned firms & U.S. citizens