stock market Flashcards
Factor Market
Where factors of production are exchanged. (Resource Market)
Good Market
Where any goods or service is sold. (Product Market)
Circular Flow
How goods, services and money flow through a free market economy
5 factors of production
Land- all basic natural resources(bean,store)
Labor- human work/labor(workers)
Physical capital- previously produced goods(coffee machine)
Human capital- education, skills(skills of worker)
Entrepreneurship- managerial ability and risk taker(skills of owner)
Economic System
The method used by a society to produce and distribute goods and services
All economic must contain these questions
What goods and services to produce?
How will they produce them?
Who will get them?
3 basic economic systems
Traditional Economy
Command Economy
Market Economy
Traditional Economy
Decisions are made based on customs(traditional way)
Command Economy
Government makes all economic decisions
Free Market Economy
Economic decisions are made by buyers and sellers
Mixed Economy
Combines traditional, market, and command economy systems
Great Britain
Features of American free market economy
Economic freedom- individual have the right to choose
Competition- more than one producer of goods/services
Private property- individual have the right to own their own property including business
Self interest- what’s in it for me
Voluntary exchange- individual may freely buy and sell goods
Profit motive- individual are driven by a desire to make money
Features of American COMMAND ECONOMY
Government regulation of some business practices(wage, # hours, safety)
Government limits certain choices(can’t buy/produce certain items)
Government provides aid to the need(medical care)
Free market
I
Command economy
The government
Mixed economy
The government and I
6 Economic goals of society
Efficiency-using least amount of $ to produce goods/services
Freedom-the liberty individuals have to make economic decisions
Equity-the issue of Fairness in marketplace & in the distribution of $$
Security-protection against economic risks(unemployment, poverty)
Growth-economy must grow in order to improve their standard of living
Environmental quality-concern for a country’s environment and natural resources
Absolute advantage
The ability to produce more of given product with same amount of resources
You’re better at it
Comparative advantage
Ability of a country to produce a product at a lower opportunity cost than other countries
WHOS GIVING UP LESS! Or who is more efficient
How to figure out the opportunity cost and comparative advantage
What you give up / what you get or do= opportunity cost
What you get or do/ what you give up= comparative advantage
