Economics Unit 1: Chapter 1-3 Study Guide

Alternative choices

A condition that results from society not having enough resources to produce all the things people would like to have

Opportunity cost
The best alternative use of money, time, or resources when one choice is made rather than another

A basic requirement for survival that includes food, clothing, and shelter

A way of expressing a need. An item that is desired, but not essential for survival

An item that is economically useful or satisfies and economic want

Market economy
And economy in which people and firms act in their own best interest to answer the WHAT, HOW, and FOR WHOM questions

Economic system
An organized way of providing for the wants and needs of people

The tools, equipment, machinery, and factories used in the production of goods and services

A rise in the general level of prices

Fixed income
An income that does not increase even though prices go up

Free enterprise
Economy in which competition is allowed to flourish with a minimum of government interference

Voluntary exchange
The act of buyers and sellers freely and willingly engaging in market transactions that leave both buyer and seller better off

A business jointly owned by two or more persons

A firm that has at least for businesses, each making unrelated products, none of which is responsible for the majority of the firm’s sales

A voluntary association of people formed to carry on some kind of economic activity that will benefit its members

Producer cooperative
Helps members sell their products

Nondurable good
not lasting or enduring; consumable or perishable.

A corporation that has manufacturing or service operations in a number of different countries

A form of business organization recognized by law as a separate legal entity having all the rights of an individual