Glossary of 15Introductory Economic Terms
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- What is the definition of economics?
- It is the study of the production, consumption and distribution of resources. It is the study of how nations deal with the question of limited resources and unlimited wants.
- What are the three basic economic questions all societies must answer?
- What do we produce?
How do we produce it?
For whom shall we produce it?
- What is scarcity?
- Scarcity is the problem of having unlimited wants and limited resources.
- What are the three basic economic systems?
Command or Planned
- How do traditional societies answer the three basic economic questions?
- They answer them the same way they have always been answered - by looking to the past, to custom, to the ways of one's ancestors.
- What are characteristics of traditional economies?
- hunter gatherers, bartering, small clans or groups, egalitarian division of labor and resources, self-sufficiency, making things they have always made, food production an essential activity
- What are the three basic kinds of resources?
- What are capital resources?
- Resources that are human made in order to make something else (another product).
- What are the forms of human resources?
- Skilled and unskilled laborers.
- What agrarian economy was common throughout the Middle Ages in Europe?
- feudal manorialism.
- What is the basis of feudal wealth in the Middle Ages?
- How does a command economy made the three basic economic decision?
- the government or central planners in the government make all or most of the decisions.
- How do market economies answer the three basic economic questions?
- Private individuals and privately owned businesses (consumers and producers) make decisions based on the laws of supply and demand in the freely operating marketplace. (also called free enterprise system)
- What are goods?
- Products produced that are tangible.
- What do most of the world's nation's have as their economic system?
- A mixed economic system.
- What are services?
- They are things that are produced and have value but are not tangible (plumber services, doctor, education, etc.)
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