module 1 exam

economics is also known as...

"the dismal science"

What did Adam Smith believe?

- freedom was vital to any economy's survival - freedom to own land or property & the right to keep the profits of business is essential - people will work hard if they believe they will be rewarded

what are the characteristics of capitalism?

-Private ownership of property -Pursuit of personal profit -Competition and consumer choice

What are the 5 factors of production?

1. Land (or natural resources) 2. Labor (workers) 3. Capital 4. Entrepreneurship 5. Knowledge

Capitalism's Four Basic Rights

1. The right to own private property 2. The right to own a business and keep all that business's profits 3. The right to freedom of competition 4. The right to freedom of choice

What is the invisible hand?

A phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits for all

are shareholders stakeholders?

No

What is the difference between a stakeholder and a shareholder?

Stakeholders have a vested interest in the business' success, whereas shareholders have ownership in in the business

What is oligopoly?

a state of limited competition, in which a market is shared by a small number of producers or sellers. ex. wireless carriers, railroads

What is a monopoly?

complete control of a product or service ex. oil, google, microsoft

___________ is the study of population with regards to its size, density, age, race, gender,income, and so on

demography

If you choose to start your own business and work for yourself, then you would be a(n)

entrepreneur

Who is Adam Smith?

father of modern economics

Who is Thomas Malthus?

he was the first person to argue population growth was going to end the world because there was not enough food supplies.

What did Malthus believe?

if the rich had most of the wealth and the poor had most of the population, resources would run out

What is monopolistic competition?

many companies selling similar but not identical products ex. restaurants, hair salons, clothing

What is perfect competition?

many competitors; identical product ex. agriculture, online shopping

What does GDP measure?

measures the total value of final goods and services produced within a given country's borders (measures both sides)

If Redbox is successful at attracting customers to a location, and Redbox locations arenear McDonald's, then McDonald's could possibly realize

more revenue

what are the characteristics of socialism?

public ownership of the means of production, pursuit of collective goals, centralized decision making (no profits allowed)

In general, it is wise for a business to

strive to create positive relationships with all stakeholders.

The chance of losing time, money, reputation, and so on, is known as

risk

Why should a business be concerned with stakeholders?

stakeholders represent a broad group of people who stand to gain or lose by the actions of the business.

Allowing customers to search other Redbox kiosks for a particular movie is madepossible by new

technology

absolute advantage

the ability of an individual, a firm, or a country to produce more of a good or service than competitors, using the same amount of resources Ex. china can produce more rice than the U.S

What is comparative advantage?

the ability to produce a good at a lower opportunity cost than another producer

What is ethics?

the branch of philosophy that deals with issues of right and wrong in human affairs (don't cheat, lie, steal)

what is market price? (equilibrium point)

the price determined by supply and demand

What is supply?

the quantity of products that manufacturers or owners are willing to sell at different prices at a specific time

What is demand?

the quantity of products that people are willing to buy at different prices at a specific time

What is economics?

the study of how people in society produce goods and services to employ resources and distribute these among members of society

How are governments considered stakeholders?

they play a role in the outcome of thebusiness through taxes, increased property values, and regulations designed to protectconsumers.