2: Economics and Business Flashcards
What is economics?
The study of the production, distribution and consumption of goods and services.
What are resources?
The inputs used to produce outputs. (Land, Labor, Capital, Entrepreneurship, Knowledge).
What are the factors of production?
Land, Labor, Capital (Building/Equipment), Knowledge and Entrepreneurship.
What is an economic system?
A system in which a society (household, business or government) makes decisions about allocating resources to produce products and about distributing those products.
What is a planned economic system?
A system in which the government exerts control over the allocation and distribution of all or some goods and services.
What is a free market economic system?
An economic system in which most businesses are owned and operated by individuals. Also known as capitalism.
What are private property rights?
A key aspect of the free market economic system in which business owners can expect to own their land, buildings, machines, etc. and keep a majority of their profits, except for taxes.
What is a mixed market economy?
An economy that relies on both markets and the government to allocate resources.
What is privatization?
When a country adopts more capitalistic characteristics and converts businesses previously owned by the government to private ownership.
What is nationalization?
When a country adopts more socialist characteristics and the government takes control of industries.
What is perfect competition?
When there are many consumers buying a standardized product from numerous small businesses.
Define demand.
The quantity of a product that buyers are willing to purchase at various prices.
Define supply.
The quantity of a product that sellers are willing to sell at various prices.
Define equilibrium price.
The point at which supply and demand intersect.
What is a surplus?
When sellers supply more of a product than buyers are willing to purchase.
