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Economics Unit 1 > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

What are Goods ?

A

Items that are useful and satisfy an economic want. They are tangible and can be classified as consumer/capital and durable/non-durable

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2
Q

What are Services?

A

Work performed for someone and are intangible.

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3
Q

What do consumers use goods for ?

A

To satisfy needs and wants.

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4
Q

What is Value ?

A

A worth expressed in dollars and cents.

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5
Q

What is Utility ?

A

A goods or services capacity to provide satisfaction which varies the needs and wants of each person.

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6
Q

What is Wealth ?

A

The accumulation of goods that are tangible,scarce, useful and transferable to another person.

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7
Q

What is the circular flow of economic activity?

A

The cycle of product markets,individuals, Factor Markets and Businesses.

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8
Q

How does the circular flow work ?

A

Product markets give goods and services to individuals . Individuals give Land,Capital ,Labor and Entrepreneurship to factor markets. Factor markets buy productive resources to from businesses and businesses give goods and services to product markets. Product markets generate Business income which the businesses then pay the factor markets for resources . The factor market take the income from resources and put it into the individuals , the individuals then put consumer spending into the product markets.

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9
Q

What are Markets ?

A

Locations/Mechanisms for buyers and sellers to trade. They are classified as local,regional, national , global and cyberspace.

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10
Q

What is a factor market ?

A

It is where people earn their incomes. Factor markets center on the four factors of production. Land , capital, labor and entrepreneurs.

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11
Q

What is a product Market ?

A

Where people use their income to buy from producers . Product markets center on goods and services.

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12
Q

What is productivity ?

A

It is a measure of the amount of output produced by the amount of inputs within a certain time. Productivity increases with efficient use of scarce resources.

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13
Q

How do specialization and division of labor improve productivity ?

A

They lead to more proficiency and greater economic interdependence.

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14
Q

How does investing in human capital improve productivity ?

A

When peoples skills abilities health and motivation advance productivity increases.

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15
Q

What does economic growth depend on ?

A

High productivity .

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16
Q

What are trade-offs?

A

The alternative choices people face in making an economic decision. A decision making grid lists the advantages and disadvantages.

17
Q

What is opportunity cost ?

A

The cost of the next best alternative among a person’s choices . The opportunity cost is the money,time or resources a person gives up or sacrifices to make his final choice.

18
Q

What is a production possibilities frontier diagram ?

A

A diagram representing various combinations of goods and services and economy can produce when fully employed.

19
Q

What is a cost-benefit analysis?

A

It helps economists evaluate alternatives by looking at each choice’s cost and benefit.

20
Q

What are alternative possibilities ?

A

Where production can take place anywhere inside the frontier.

21
Q

What is a free-enterprise economy ?

A

Where people and privately owned businesses rather than the government ,to make the majority of the economic decisions.

22
Q

What is a traditional economy ?

A

Where roles and economic decisions are made by customs. Like remote tribes . An advantage of this economy is that everyone knows which role to play and everyone knows the what,how and for whom to produce. A disadvantage is that these economies are behind and have a lower standard of living than other societies.

23
Q

What are command economies ?

A

Where a central authority determines the WHAT,HOW and FOR WHOM to produce. These economies are communist countries. There are a few advantages like it can drastically change in a short time and basic health and public services are available at little or no cost. Some disadvantages are hard work inst awarded, the bureaucracy delays decisions and little flexibility with day to day issues.

24
Q

What are market economies ?

A

The producers determine the WHAT HOW and FOR WHOM to produce. The consumers dollar acts like a vote ensuring that producers continue to bring products and services that consumers want to buy. Advantage: High individual freedom. Disadvantages: Inability to meet every persons basic needs.

25
Q

What is economic freedom?

A

The people are allowed to make their own economic decisions.

26
Q

What is economic efficiency ?

A

It means that resources are used wisely and that the benefits gained are greater than the costs.

27
Q

What is economic equity ?

A

It is the social goal that results in programs to help support the ill, the elderly and workers who have lost their jobs.

28
Q

What is full employment ?

A

It means to provide as many jobs as possible.

29
Q

What is price stability ?

A

Otherwise known as freedom from inflation is important to anyone trying to provide basic necessities on a limited income and for anyone planning their economic future.

30
Q

Why is economic growth important?

A

Because populations tend to increase and existing populations tend to want more goods and services .

31
Q

What is capitalism ?

A

A market economy in which private citizens own the factors of production.

32
Q

What is a free enterprise system ?

A

Where there is limited government interference and businesses are free to compete.

33
Q

What is voluntary exchange ?

A

It is where buyers and sellers are free to decide whether or not to complete a transaction , that results in both buyers and sellers believing that the good is of more value than the product given up .

34
Q

What do private property rights do ?

A

They motivate people to succeed . Any rewards they earn are kept.

35
Q

What does the profit motive do ?

A

It encourages entrepreneurship and is responsible for the growth of a free enterprise economy.

36
Q

What does competition do ?

A

It helps sellers lower prices.

37
Q

What do entrepreneurs use to make a profit ?

A

Land labor and capital .

38
Q

Why does the government have the role as a protector?

A

Because they can pass and enforce laws meant to prevent the abuse of consumers and workers.

Economics Unit 1 (1 decks)

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