Definition: Economic systems are frameworks through which societies organize and distribute available resources, services, and goods.

Example: In a command economy, like North Korea, the government makes all major economic decisions, while in market economies like the United States, private businesses drive economic activity.

Highlight: Opportunity cost represents the value of the next best alternative foregone when making a choice.

Vocabulary: Capitalism refers to an economic system where private owners control trade and industry for profit.

Definition: Perfect competition occurs when multiple sellers compete by offering better products and lower prices.

Vocabulary: Consumer sovereignty describes how consumer preferences ultimately direct production decisions.

Highlight: The circular flow model illustrates the continuous movement of money and resources between producers and households.

Example: Specialization occurs when a company focuses on producing a single product, like a smartphone manufacturer concentrating solely on mobile devices.

Definition: Microeconomics focuses on individual economic units while macroeconomics examines larger economic entities and systems.

Vocabulary: Consumers are individuals who purchase goods and services for personal use, while producers create or supply these items for sale.

Example: A trade-off occurs when a student chooses to study instead of watching television, giving up one activity for another.

Highlight: The distinction between wants (desired items) and needs (necessities for survival) is crucial for understanding consumer behavior.