Chapter 2 Test Flashcards
scarcity
a shortage of resources
factors of production
all the economic resources necessary to produce a society’s goods and services
natural resources
raw materials from nature used to produce goods
labor resources
individuals that make the goods + services for which they are paid
capital resources
things used to make goods + services
entrepreneurial resources
the people who recognize opportunities and start businesses
entrepreneur
a person who recognizes a business opportunity and organizes, manages, and assumes the risk
economics
the study of how individuals and groups of individuals strive to satisfy with making choices
equilibrium price
the point in which the quantity demanded and the quantity supplied meet
price
the amount of money given or asked for when goods + services are bought or sold
supply
the amount of goods + services that producers will provide at various prices
demand
the amount or quantity of goods + services that consumers are willing to buy at various prices
market economy
economic system which decisions are made in the marketplace
command economy
economic system where central authority makes key economic decisions
mixed economy
a combination of a market economy and command economy
how are entrepreneurial resources different from labor resources?
both people. Entrepreneurs start business that produce goods + services. Labor resources get paid for making them
Describe the three basic economic questions that each country must answer to make decisions about using resources
What should be produced?, How should it be produced?, Who should share in what’s produced?
Explain how the following are in a market economy
Resources (who owns them)- privately owned
Role of Buisness- Make a profit, supply + demand determines $
Income distribution- varies; rich and poor
Are cost and price the same thing?
No, Price is how much you pay for an item, cost is how much it costs to make the item
Most nations have a ____ economy
mixed
Explain how the following are in a command economy
Resources (who owns them)- Government
Role of Business- Government determines the $ of goods + services
Income distribution- Equally. High and low skilled workers get paid the same
When the supply goes down, the demand and price goes ______
up
When the supply goes up, the demand and price go _____
down
Capitalism
market determines $, gov is hands off
Socialism
Gov controls more, gap between rich and poor is similar
Communism
equality, gov is in total command
