midterm

people evaluate both the benefits and the costs of their choices. because of scarcity, every decision to acquire a good or service or to spend time or money in a certain way has a cost attached to it.

there is not enough, nor will there ever be enough, goods or services to satisfy all the wants and needs of all individuals, families, and socieities.

justice or fairness

income for labor

income from land resources

income to the entrepreneur

take action or doing something about it, usually a result of a decision of a policy maker.

various combinations of goods that an economy can produce with full employment and fixed resources and technology

machinery/equipment to produce

food and household furniture that are produced for final buyers.

• what to produce
• how to produce it
• who gets the goods

• market system
• decisions are made by individuals
• rely on prices as teh way buyers and sellers communicate

basic decisions are made by individuals.

economic system where many factors of production are collectively owned and attempts are made to equalize the money between the people

• command economy
• decisions are made by planners and there are no private property rights. resources are owned by the people or the government.

• capitalism
• no governmental interference

• after ww2
• federal govertment had the right and responsibility to provide an environment of full employement, full production, and stable prices. congress could manipulate taxes and governmental spending and run deficit budgets in an effort to bring economy to where they wanted it.

• relationship between amount of product a consumer will by and product's price.
• quantity demand falls as price rises/quantity demand rises as price drops

inverse relationship etween price and quantity

• downward sloping line on graph
• consumers demand more at lower prices

quantity demanded is less than supplied.

quantity demanded is greater than supply

lower price limit

upper price limit

a change in the price causes a change in the quantity purchased.

change caused by non price factors.

the price that sellers set that buyers are comfortable with buying.

a strong response to a price change

• frictional -- people are voluntarily out of work
• cyclical -- seasonal work
• structural -- job is no longer there

occurs when those who want to be unemployed are and everyone else is working

worker who drops out of the labor force because they have not been successful at finding a job.

increased prices

increases in seller's costs are passed on to buyers.

buyers demands are greater than seller's supply

not to full potential

spending over what household earned income is

income that households are not spending

income for no service or good