-
not having enough resources
scarcity
-
a necessity such as food, water, shelter
need
-
something you would like to have but it is not necessary
want
-
there is no such thing as a free lunch
someone had to pay for the food somewhere down the line
-
3 basic questions
- 1. what to produce
- 2. how to produce
- 3. For whom to produce
-
4 factors of production
- 1. land (natural resources, sunshine, livestock)
- 2. labor (people and their efforts and abilities)
- 3. capital (tools, equipment, machines, buildings)
- 4. Entrepreneurs (risk taker who will invest/start to produce/ create
-
GDP
- Gross Domestic Product
- $ value of all goods and services produces in a country
-
4 purposes of economics
- 1. describe economic ideas
- 2. analyze and figuire out whats going on in economy and determine what is good or bad
- 3. explain what the ^ means
- 4. predict whats going to happen next
-
useful tangible items
goods
-
lasts for more than 3 years
durable good
-
lasts for less than 3 years
nondurable good
-
used to make more goods
capital
-
final product for consumers
consumer goods
-
worth that can be expressed in $
value
-
some necessities cost less than things that are not necessities
Paradox of Value
-
-
to have value something must have
utility and be scarce
-
people's skills, abor, ability, health, knowledge
human capital
-
organizing work so each person has a specific job they are specialized in
division of labor
-
countries are dependent on others for products/services
Economic Interdependence
-
alternative choices we make when buying items opportunity casts- the difference in cost for the next "best" item
trade off
-
a diagram prepresenting different possible production levels of different items
production possibilities curve
-
quality of life based on luxeries owned
standard of living
-
do what your ancestors did/ use basic skills and resources/ everyone provides for one another
traditional economy
-
+ & - to Traditional Economy
- + = everyone knows their role, immediate needs are met
- - = discourages new ideas, no room for technological advancement/ lower standard of living
-
the gov controls all aspects of the economy
command economy
-
+ & - to Command Economy
- + = can change direction easily, provides for needs of everyone
- - = consumers have no say, products are lower quality, little to no incentive for new ideas or inventions
-
people make decision in their best interests (buy what u want)
market economy
-
+ & - in Market Economy
+ = freedom, promotes/rewards creativity, new ideas, variety, consumer satisfaction
-
combine elements of others
mixed economies
-
Goal: buy/ produce what you want
economic freedom
-
Goal: make the best use of resources
Economic Efficiency
-
Goal: equality
Economic Equity
-
Goal: want to make sure that the economy is stable
Economic Security
-
Goal: keep economy getting better
Economic Growth
-
Goal: as many jobs as possible stable prices
Full Employment
-
5 Characteristics of Free Enterprise Capitalism
- 1. Economic Freedom
- 2. Voluntary Exchange
- 3. Private Property Rights
- 4. Profit Motivation
- 5. Competition
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