Unit 1 Study Guide Flashcards
Three factors of production
Land, Labor, Capital
Purpose of a production possibilities curve
illustrates how efficient an economy is by portraying if an economy is producing all it can or if it is not using its maximum resources
What makes an economy efficient
using their resources to produce max number of goods and services
explain guns and butter scenario
this shows how metal can be used, it can be used to create military equipment (guns) or used to create a machine that churns butter
what is scarcity and why does it exist
This is something that exists because there are limited resources to meet wants. Needs and wants will always be unlimited but sources will be limited, the idea of scarcity is the starting point to thinning economically.
Who uses the three factors of production to make goods and services
entrepreneurs
Central government in control
centrally planned economy
households own factors of production
free market
little government intervention with tradition and free market
mixed economy
biggest benefit of a free market
encourages growth
self-motivated forces in free market
self interest
why do markets exsist
None of us produce all the goods and services we require to satisfy our needs and wants
what protects individuals in times of diaster
safety net
A period of macroeconomics expansion followed by a period of contraction
business cycle
three main economic goals
employment growth stability
