Economics: The study of how people make choices about limited resources Scarcity: Not having enough resources to meet everyone's wants Resources: Land, labor, capital and entrepreneurship used to make goods and services Natural resources: Materials from nature, like water, oil and soil Labor: Human work, both physical and mental Capital: Tools, machines and buildings used to make goods Entrepreneur: A person who starts a business and takes risks Needs: Things required to live, like food and shelter Wants: Things we desire but do not need Goods: Physical products that satisfy wants Services: Work done for others Consumer: A person who buys and uses goods and services Producer: A person or business that makes goods or services Opportunity cost: The next best thing you give up when you make a choice Trade-off: Giving up one thing to get another Incentive: Something that motivates people to act Supply: How much of a good sellers are willing to offer at each price Demand: How much of a good buyers are willing to buy at each price Law of demand: When price rises, quantity demanded falls Law of supply: When price rises, quantity supplied rises Equilibrium price: The price where supply equals demand Shortage: When demand is greater than supply Surplus: When supply is greater than demand Price: The amount of money asked for something Market: Place or system where buyers and sellers trade Competition: Businesses trying to win customers by offering better prices or quality Monopoly: When only one business sells a product Profit: Money left after paying all costs Revenue: Money a business takes in from sales Cost: What it takes to make or buy something Fixed cost: A cost that stays the same, like rent Variable cost: A cost that changes with output, like materials Wage: Pay for work Salary: Fixed pay for a job, usually yearly Income: Money received by a person or household Budget: A plan for earning, saving and spending money Saving: Setting money aside for later Investment: Putting money into something expecting it to grow Interest: Money paid for borrowing, or earned on savings Credit: Borrowing money or buying now to pay later Debt: Money that is owed Loan: Money borrowed that must be repaid Bank: Business that holds money and makes loans Inflation: A general rise in prices over time Deflation: A general fall in prices Recession: A period when the economy shrinks Depression: A very severe, long economic downturn GDP: Gross domestic product: total value of goods and services a country produces in a year Unemployment: When people who want jobs cannot find them Tax: Money paid to the government Tariff: A tax on imported goods Trade: Exchange of goods and services Import: A good bought from another country Export: A good sold to another country Barter: Trading goods directly without money Specialization: Focusing on producing one thing Division of labor: Splitting work into tasks Productivity: Output per worker or per hour Free market: Economy where buyers and sellers decide what to produce and at what price Command economy: Government makes most economic decisions Mixed economy: Combination of private choice and government action Traditional economy: Decisions based on custom and habit Capitalism: System based on private ownership and profit Socialism: System where the community or government owns major industries Private property: Goods and land owned by individuals Public goods: Things everyone shares, like roads and parks Externality: A side effect of an activity that affects others, like pollution Subsidy: Government money to help support an industry Regulation: Government rules for businesses Stock: A share of ownership in a company Bond: A loan to a company or government that pays interest Stock market: Place where shares in companies are bought and sold Entrepreneurship: Starting and running a business Standard of living: How well people live based on goods, services and money Global economy: Trade and money flows connecting countries Globalization: Increasing connections among economies worldwide Free flashcards from Peabody at peabody.kids/flashcards/economics-vocabulary