Economics Packet 1

Entrepreneurship (FOP)

The human resources that assume the risk of organizing other resources to produce goods and services

Labor (FOP)

The quantity and quality of human effort directed toward producing goods and services

Economics

The study of the efficient use of limited resources to achieve maximum satisfaction of human wants and needs

Economic System

The way a society chooses to allocate its resources and distribute its goods and services

Economic Equity

Ensure that people receive a fair portion of the economy's output

Normal profit/loss

Entrepreneurship

Capital (FOP)

Factories, Machines, and tools made by people and used to produce goods and services

Consumer good

If a producer's output is purchased by consumers for its final use

Consumer capital

If a producer's output is used to make other goods

Wage

Labor

Rent

Land

Land (FOP)

Natural Resources which are present without human intervention

Goods

Objects that satisfy wants and needs and are tangible

Producers

People who make goods and provide services

Consumers

People whose wants are satisfied by using goods and services

Economic Growth

Producing more and better goods and services over time which will lead to a higher standard of living

Economic Security

Provide for those who are unable to earn minimum levels of income

Full Employment

Provide jobs for all citizens who are willing to work

Scarcity

Society has unlimited wants but limited productive resources

Macroeconomics

Study of entire economies, their performance, and policies to promote stability and growth in the entire economy.

Microeconomics

Study of individual consumers, producers, markets, or industries

Opportunity Cost

The highest valued alternative that must be given up when another option is chosen

Economic Model includes

1) Parts of the economies that are related, variables 2) Assumptions about those relationships 3) Observations about the interaction of those variables 4) The implications of the relationships

3 Fundamental Economic Questions

1) What to produce? 2) How to produce? 3) For whom to produce?

Utility

Ability of a good to satisfy a want

Economic efficiency

Achieving the greatest output with the available inputs (resources)

Services

Activities that satisfy wants and needs and are intangible

Price Level Stability

Avoiding inflation or deflation

Interest

Capital

Economic Freedom

Consumers pursue freedom of choice and producers meet consumer's needs