The fundamental economic
problem – unlimited collective
human wants/needs, limited
resources. Therefore, we must
make choices and prioritize what
The next best thing
that you would have
done with your
resource if you
hadn’t done what
you did with your
Revenue - costs =
profit. What’s left
over after you’ve
paid all your costs.
Land, labor, and
Parts of the physical non-human
universe used for production (soil,
sun, oil, etc.)
Human work used to transform a part
of the non-human universe into a
product that can be bought or sold.
The means of production needed to make the
production and selling possible – including the
wages to hire the laborer (financial capital), the
tools for the laborer to use, the road to
transport the product (fixed capital). Capital is
wealth invested to make more profit.
Anything that can be bought or sold.
Especially something that is
interchangeable with no qualitative
differences (e.g. #2 corn).
Any situation in which buyers
and sellers can do what they
Usually used to describe a market
without government intervention. May
sometimes be used to describe a
market undominated by any
concentration of power.
An economic system based on the
private ownership of wealth and the
profit motive and market mechanisms
of labor, production, consumption, etc.
A system of tremendous
productivity based on the
transformation of human
beings into rented
machines who labor for the
profit of the wealthy.
An “ideal” situation in which infinite
numbers of buyers compete for
infinite numbers of sellers, with
perfectly interchangeable products,
and perfectly shared information, no
barriers to entry, etc. In other words,
no participants in the market can
ALTER the market.
Capitalists make &
based on desire for
Used by Adam Smith to describe
the “magical” dynamic of markets
springing into existence, laborers
seeking jobs, successful firms hiring
laborers, buying and selling – all as
if organized by some power, but
actually coordinated by peoples’