Econ Unit 1 Flashcards
4 factors of production
land, labor, capital, entrepreneurship
3 economic questions
what, how, for whom
paradox of value
scarce things are more expensive
GDP
(gross domestic product) total monetary value of goods and services produced within a country’s boarders
command economy
everything determined by government
traditional economy
relies on traditions and cultural beliefs
free enterprise
private businesses in competition with government to regulate
free market
unrestricted competition between privately owned businesses
capital goods
used to produce other goods
durable goods
last over 3 years
nondurable goods
regularly consumed
scarcity
when the want for a good exceeds the supply
opportunity cost
loss of potential gain from one alternative when another is chosen
productivity possibility fronteir
illustrates possible productivity outcomes in terms of good production vs. time
sole proprietorship
sole responsibility for debts but can manage however you want
partnership
split duties and responsibility but conflicts can arise
corporation
easy to access capital but more complicated to form
vertical merger
companies in different stages of manufacturing or marketing join together
horizontal merger
firms that produce the same kind of product merge together
non-profits
operate to promote the collective interests of their members rather than to seek financial gain for their owners
minimum wage
motivates people to work but puts strain on businesses
who regulates corporations and the sale of stock
the securities and exchange commission (SEC)
corporation that has manufacturing or service operations in multiple countries
multinational
non-cash charge a firm takes for the wear and tear on capital goods
depreciation
conglomerate
a corporation made up of several independent businesses
