Economics Ch. 1-2: Econ Basics Review Flashcards
What are the three economic questions?
What to produce?
How to Produce?
For Whom to Produce?
Scarcity
unlimited wants and needs with limited resources
Economics
study of choices people make to satisfy their wants and needs
Microeconomics
study of individual businesses, households, and industries
Macroeconomics
study of an entire nation’s economy. Ex. GDP, Unemployment, Inflation, world trade
Factors of Production
Natural resources (raw materials),
Human resources (skilled & unskilled workers) Capital resources (buildings, equipment, machinery, tools)
Entrepreneurial resources
What is the incentive for entrepreneurs?
Profit
Traditional Economics System
where children take on the economic roles of their parents
Capitalism
based upon free enterprise where business can be conducted freely with no government interference.
Economic Systems
Capitalism, Traditional, Command, and Market
6 Economic Goals of the U.S.
Freedom
Efficiency
Equity/ fairness
Security
Stability
Growth
Production Possibilities Curve
Measures tradeoffs or opportunity cost when choosing the production of one good or service over another. Analyzing the tradeoff between producing two products.
Independent or self sufficiency
produce everything you need in your local economy without outside assistance.
Efficiency
to make the best use of our scarce resources in the production process
Productivity
the number of outputs divided by the number of inputs
