Economics Chapter 1 and 2 Test Review
democratic socialism
government owns some factors of production, individuals can influence government ownership by electing government officials
self-interest
impulse that encourages people to fulfill their own needs and wants
market economy
individuals answer the three economic questions, the government has no say
capitalism
individuals own factors of production and answer three economic questions
natural resources
items provided by nature that can be used to produce goods or services
capital resources
manufactured materials used to create other products
value
relative worth of an item when it is involved in an exchange
command economy
relies on government officials to answer the three economic questions, individuals have little to no say in economic choices
microeconomics
the study of how small economic actors make choices
economics
the study of the choices that people make to satisfy their needs and wants
utility
the usefulness to a person of a good or service
needs
things that are necessary for survival
price stability
when price levels of goods and services the economy are relatively constant
scarcity
when resources are limited and wants or unlimited, is most basic problem of economics because it forces everyone to make choices
opportunity cost
when we choose something, value of good/service that we did not choose (next best alternative)
self-sufficiency
when you can provide all of your own wants and needs without any outside assistance
money
any item that is readily accepted by people in return for goods and services
wants
goods and services that people consume beyond what is necessary for survival
private property
goods owned by individuals or businesses rather than government
authoritarian
"communism", government owns or controls nearly all of the factors of production
services
actions or activities performed for a fee
credit
allows customers to use an item before completing payment for it
traditional economy
based on rituals, habits, laws, and religious beliefs developed by their ancestors
entrepreneurship
combination of organizational abilities and risk taking involved in starting new business or introducing a new product
mixed economy
combines elements of traditional, common, and market economic models
barter
direct trade
allocate
distribute limited resources to satisfy the greatest number of needs and wants
competition
economic rivalry that exists among businesses selling the same or similar products
human Resources
efforts exerted by humans during the production process
economic growth
efforts to increase the amount of goods services produced by each worker in the society
trade-off
one good is sacrificed for another
contracts
oral or written agreements to buy and sell
government
oversees and regulates the decisions of producers and consumers and regulates the effects of these decisions on the economy as a whole
consumers
people who decide to buy things
standard of living
peoples of economic well being
economist
person who studies the economic choices we make
goods
physical objects that can be purchased
voluntary exchange
producers and consumers are free to purchase and sell when terms of trade is acceptable
incentive
something that encourages you to behave in a particular way
free enterprise
system where business can be conducted freely with little government interaction
full unemployment
the lowest possible rate of unemployment
macroeconomics
the study of behaviors on entire economies
