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Terminology

allocation    process of making choices of which need will be satisfied and how much resources can be used to satisfy the wants.

command economy (social economy)    economy where the government determines the economic questions representing the interest of society.

competition    rivalry between two or more individuals or groups to gain benefits from a third party (consumer).

economics    the study of how society deals with the allocation of scarce resources to meet unlimited wants and needs.

exchange    giving one thing in return for some other item.

invisible hand    incentive that guides individuals to choose in the best interest of society by pursuing their own self-interest.

limited resources    not enough resources to meet all the wants and needs of man.

macroeconomics    the branch of study that examines the whole economy.

market    exchange activities between buyers and sellers of goods and services.

market economy    economy in which the economic questions are decided by individuals in the marketplace.

microeconomics    the branch of study that examines the choices of individuals concerning one product, one firm, or one industry.

opportunity benefit    value gained by making a certain choice.

opportunity cost    value of any alternative that is given up when a choice is made.

private enterprise    system where individuals take the risk of producing goods or services to make a profit.

private goods    goods privately owned and use to benefit individual owners.

private sector    part of an economy owned by individuals and operated for personal benefit.

profit    the difference between the money received from the sale of a product and the cost of production.

public goods    goods and services available to the whole society.

public sector    part of an economy that is owned by the whole society and operated for the benefit of society.

scarcity    limited resources meet unlimited wants and needs.  Decisions must be made to determine what needs will be met with the resources.

unlimited wants and needs    human characteristic of never having all wants and needs met.