econ test 1 review
Terms
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- economics
- the study of the decisions that go into producing, distributing and consuming goods and services
- goods
- tangible (touchable) objects that can be collected(golf clubs, food, shoes,etc.)
- services
- intangible things that people do (teaching, doctors,washing cars, babysitting, lawnmowing)
- scarcity
- condition where the needs and wants of the people are greater than the resources to satisfy them.
- opportunity cost
- the value of a second choice that is given up when a first choice is taken
- trade offs
- choices between alternatives where using resources for one purpose must be at the expense of another purchase
- factors of production
-
the inputs used in the production process:
-natural resources
-labor
-capital
-entreprenuership - production possibilities frontier/graph
- a graph showing different attainable combinations of two possible outputs that a given amount of resource can produce.how many products you can make at the same time with your resources and still have a profit.
- producers
- people who make the products or supply the service
- consumers
- people who use the products or service
- traditional economy
- an economic system in which the basic economic Q's (what, how, and for whom)are decided by custom. economic decisions are dictated by the way they were done in the past. Countries have incorpoerated traditional economic features into their current economic system as they have developed
- command economy
- an economic system in which the decisions on the basic questions are made by the governement
- mixed economy
- a combination of command and market economies in which the basic economic questions are made both by the government and by private individuals
- market economy (capitalism)
- an economic system in which the decisions on the basic economic questions are made by private individuals and groups
- competition
- the battle between businesses to produce goods and services
- profit
- money that is made from the sale of goods and services goes to the owners of the business
- free enterprise
- permits any person or group to start and operate their own business
- freedom of choice
- people may buy what they want to and work where they wish
- private ownership
- the people own the property, business and economic resources
- limited government
- the constitution prevents the government from having too much control over the economy
- division of labor
- dividing production up into specific tasks in order to increase efficiency and to lower costs
- specialization
- concentrating a person's labor (or other function of production) on a single task in order to increase efficiency
- wealth
- the total value of accumulated goods and services
- 3 basic economic questions
-
-what goods and services should be produced?
-how should these goods and services be produced?
-for whom is the benefit of these goods and services being produced? - natural resources
- has not been changed by people. is usally land or something that comes from the land. (raw materials, cotton plant, metals, trees)
- labor
- contributing human effort in the production process (cotton pickers, manufacturer)
- capital
- used by labor in making products (machines) usually a man made instrumenet of production such as a tool or machine. Money can also be considered as capital
- entrepreneurship/management
- takes the risks and responsibilities of starting a business by combining the other factors of production to create a product
- needs
- things that people must have to survive
- wants
- things that people would like to have