Chapter 1: What is Economics? Flashcards
What is scarcity?
- you can’t have everything
- unlimited wants vs. limited needs
- DEMAND is greater than SUPPLY
What determines demand?
price
Who is limited in terms of money and how?
INDIVUIDALS - income - borrowing - savings COOPERATIONS - profits - equity financing GOVERNMENT -taxes -borrowing -printing (monetize)
What are GOODS?
tangible (produced) items of value
What are SERVICES?
- facilitating something
- transaction in which no physical goods are transferred from buyer to seller
What are RESOURCES?
anything used as an input in the creation of goods and services
What are FACTORS OF PRODUCTION?
resources including land, labor, capital, and enterpreneurship
What is SCARCITY?
condition resulting from unlimited wants and limited resources
What is ECONOMIZE?
effort to get the most out of ones resources
What is EFFICIENCY?
to do more with the same or the same with less
What is INCOME?
return in the form of wages, profit, rent, and interest earned by the factors of production
What is WEALTH?
the value of the things we own
What is NETWORTH?
left over money
What is PROFIT?
what remains after the cost of doing business have been met
What is another name for profit?
residual
What is another name for residual?
profit
What is TRADEOFF?
giving up on something in order to obtain something more desirable
What is another name for tradeoff?
opportunity cost
What is another name for opportunity cost?
tradeoff
What is ECONOMICS?
the study of people make a living
What two world do economists deal with?
- the world that is
- the world that ought to be
What are the two factors of the world that ought to be?
- politics
- personal values
What do democrats believe should be done about the scarcity of jobs?
believe government should provide jobs
What do republicans believe should be done about the scarcity of jobs?
believe private sectors/companies should provide jobs
What is another name for natural resources?
land
What is another name for human resources?
labor
What are the four factors of production and define/explain them all
NATURAL RESOURCES
things provided by nature that go into the creation of goods and services
HUMAN RESOURCES
physical and mental effort that people put into the creation of goods and services
CAPITAL
- something created by people to produce other goods and services
- describes the money available to a business firm
ENTREPRENEURSHIP
managerial or organizational skills needed by firms to produce goods and services
What is the price paid for the use of natural resources called?
rent
What is the price paid for the use of human resources called?
wages
Can you make money both physically and mentally?
yes
What is VENTURE CAPITAL?
first money made/collected
What is the payment used for someones money called?
intrest
What are rewards for entrepreneurship?
profit
What are the four economic questions that dictates the type of system a country has?
- What good are to be produced?
- How are these goods to be produced?
- Who receives the goods that are produced?
- How does society obtain their goods?
If the same goods are produced time after time, what economic system does the society have?
trditional
If goods are produced based on the demand of consumers, what economic system does the society have?
market
If goods are produced based on the instructions of the governmnet, what economic system does the society have?
command
What economic system is represented when produce is efficient?
market
What economic system is represented when the government dictates who gets what?
command
What economic system is represented when goods are produced they same way they have always been?
traditional
What economic system is represented when the people with the most money get the goods?
market
What economic system is represented when the government dictates who gets what?
command
What economic system is represented when the same people get the same goods?
traditional
How does a society obtain their goods?
- produce the goods themselves (mercantilism)
- trade for them (fair trade)
- gifting
What has been the problem with trade since 1960?
the US has a defect balance of trade
What are suggested solutions to the US’s defect balance of trade?
- tariff
- be efficient
Explain how to raise living standards in lesser developed countries…
you need to have an agricultural revolution so that farmers can be released from the farms (while the farms are still producing) and sent to work in the city and then the industrial can begin ones the agricultural revolution is finished
What are the types of economic systems?
- traditional
- command
- market
- mixed
What is an ECONOMIC SYSTEM?
approach a country uses to deal with scarcity and achieve its economic goals
What is PROFIT MOTIVE?
the force that drives owners to produce what buyers want at the lowest price
What is MARKET PLACE?
any place where goods are bought and sold
What is SUBSISTANCE LEVEL?
level of income necessary to maintain a minimum standard of living (just enough money to survive)
What is INTENSIVE FARMING?
more people than land
What is EXTENSIVE FARMING?
more land than peple
What are the traits of a traditional economic system?
- change and growth proceeds slowly
- people do what their parents have done before them
- most goods are produced and consumed locally
- practice intensive farming
What are the traits of a command economic system?
a system where all major decisions concerning allocation of resources are made by government agencies
What is an example of a command economic system?
Gosplan - Russia’s five years plans
What are the traits of a market economic system?
- private ownership of land (land and capital)
- competition
- profits are the key motivation
Out of the four factors of production, which two can be owned?
- capital
- natural resources / land
What is an alternate name for market economic system?
free enterprise
What is an alternate name for free enterprise?
market economy
What is a market economic system?
a system where decisions ate made by individual buyers and sellers in a market place that determines the what, how, and for whom
What is a mixed economic system?
a system that combines elements of private ownership of the means of production with private ownership
What is PUBLIC OWNERSHIP?
owned by the government (postoffice)
What is PRIVATE OWNERSHIP?
any private company owned by individual(s) (Apple, Microsoft, etc.)
What is the PRODUCTION-POSSIBILITY CURVE?
it illustrates the effect of scarcity and opportunity cost on society
What is an example of the production possibility curve?
spending more on military than domestic and vice versa
What is FRONTIER?
the most a nation could produce if all its resources were fully utilized
What is MICROECONOMICS?
the study of individuals/ consumers and the firm
What is MACROECONOMICS?
the study of the economy as a whole
