Unit 1 Test Flashcards
SCARCITY
Fundamental economic problem facing
all societies resulting from a combination
of scarce resources and people’s virtually unlimited needs and wants.
ECONOMICS
Social science dealing with how people satisfy seemingly unlimited and competing needs and wants with the careful use of scarce resources.
Durable Good
A good that lasts for at least three years
when used regularly.
NONDURABLE GOOD
An item that wears out, is used up, or
lasts for fewer than three years when
used regularly.
UTILITY
The ability or capacity of a good or service to be useful and
give satisfaction to someone.
Gross Domestic Product (GDP):
monetary value of all final goods,
services, and structures produced
within a country’s national borders during a one-year period.
PRODUCTION POSSIBILITIES CURVE
Diagram representing all possible
combinations of goods and/or services
an economy can produce when all
productive resources are fully employed.
OPPORTUNITY COST
Cost of the next best alternative use of
money, time, or resources, when one
choice is made rather than another.
Trade-Offs
alternative
that must be given up
when one choice is made
rather than another.
ECONOMIC
GROWTH
Increase in a nation’s total output of goods and services over time
PRODUCTIVITY
Measure of the amount of output produced in a specific time period with a given amount of resources
ECONOMIC iNTERDEPENDENCE
Mutual dependence of the economic activities of one person, company, or nation on that of another
MARKET
Meeting Place or mechanism through which buyers and sellers of an economic product come together; may be local, regional, national, or global
ECONOMIC SYSTEMS
Organized way of society provides for
the wants and needs of its people.
TRADITIONAL ECONOMY
Economic system in which the allocation
of scarce resources, and other economic
activity, is the result of ritual, habit, or
custom.
COMMAND
ECONOMY
Economic system characterized by a central authority that makes most of the major economic decisions
SOCIALISM
Economic system in which government owns some factors of production and has a role in determining what and how goods are produced.
MARKET ECONOMY
Economic system in which supply, demand, and the price system help people allocate resources and make the WHAT, HOW, and FOR WHOM to produce decisions; same as free enterprise economy.
Capitalism:
economic system
in which private citizens own and use the factors of production in order to generate profits.
COMMUNISM
Economic and political system in which factors of production are collectively owned and directed by the state; a theoretically classless society in which everyone works for the common good.
PRIVATIZATION
Conversion of state-owned factories and
other property to private ownership.
VOUCHERS
Certificates that could be used to purchase government-owned property
during privatization.
Five Year Plan
Comprehensive, centralized economic plan used by the Soviet Union and China to coordinate development of agriculture and industry
Collectivization
Forced Common ownership of factors of production; used in the former Soviet Union in agriculture and manufacturing
Nationalization:
shift of an economy, or part of an economy, from private ownership to government ownership.
KIERETSU
Independently owned group of Japanese
firms joined and governed by an external
board of directors in order to regulate
competition.
BLACK MARKET
Market in which goods and services are
sold illegally.
Capital-intensive
Production Process requiring large amounts of capital in relation to labor
Population Density
Number of people per square mile of land area
Why do all societies face scarcity?
All societies face scarcity because all have unlimited wants and needs with limited resources
3 questions all societies have to face
WHAT to produce, HOW to produce, and FOR WHOM to produce
Factors of Production
Land, Capital, Labor, Entrepreneurs
Consumer Rights
The right to:
Safety
Be informed
Choose
Be heard
Redress
