Absolute Advantage - being able to produce more of something or produce something with less resources.
Capital / Capital Goods - tools, machines, and buildings used to produce things.
Command Economy - economic decisions are made mostly by government leaders.
Comparative Advantage - being able to produce something at a lower opportunity cost.
Constant Opportunity Cost - the amount of one good that I have to give up to get another good stays the same, no matter how much I switch between them.
Cost-Benefit Analysis - a comparison of the costs and benefits of taking an action.
Diminishing Marginal Utility - a law stating that, as we add more units, we tend to receive less marginal benefit from each additional unit.
Economics - the study of how people, businesses, and governments deal with scarcity through choices involving trade-offs.
Enterpreneurship - the organizing of land, labor, and capital to produce goods and services that people want.
Explicit Costs - the direct cost of doing or buying something - the amount of money it costs.
Factors of Production - the things needed in order to produce goods and services - land, labor, capital, and enterpreneurship.
Fair Terms of Trade - a trade ratio of one good for another that benefits both trading parties.
Goods - things that provide value to people.
Implicit Costs - the opportunity costs of doing or buying something, other than the money spent.
Increasing Opportunity Cost - the amount of one good that I have to give up to get another increases the more I choose to switch.
Invisible Hand - a metaphor for the unseen forces that allow people to organize themselves in very complicated ways to produce things for each other.
Labor - human work.
Land - physical space and natural resources.
Marginal - the effect of adding one more of something.
Marginal Analysis - the process of using cost-benefit analysis to determine the best combination of goods to buy.
Marginal Benefit / Marginal Utility - the amount of benefit enjoyed by adding/buying one more of something.
Marginal Cost - the amount spent to add/buy one more of something.
Marginal Net Benefit - the difference between the marginal benefit and marginal cost of an action.
Marginal Utility Per Dollar (MU/P) - the marginal benefit of a unit divided by its marginal cost.
Market Economy - economic decisions are made mostly by individuals and businesses.
Mixed Economy - economic decisions are made by both government leaders and individuals and businesses.
Needs - things we must have to survive.
Normative Economics - making recommendations about how parts of the economy should be.
Opportunity Cost - what you have to give up in order to get something else.
Positive Economics - the economic study of why things are the way they are.
Productive Efficiency - producing the most we possibly could.
Resource Allocation - how we choose to use or give out resources.
Scarcity - the idea that resources and things are limited.
Services - goods that are not tangible objects.
Trade-off - having to give up one thing in order to get another.
Traditional Economy - economic decisions are based on the way things have always been done.
Utility - satisfaction or enjoyment, usually measured in dollars.
Wants - things we would like to have, but don't need in order to survive.