Economics Unit One

What are six important characteristics of free enterprise?

1) Economic Freedom 2) Economic Efficiency 3) Economic Equity 4) Security 5) Economic Stability 6) Economic growth

How does a traditional economy answer the basic question, "How should it be produced?"

It will be produced like it always has with the kids taking their parents professions

Your friend says "I need some new clothes." Under what condition would this be expressing a need? A want?

It would be a need when you don't have any clothes. It would be a want when you have some but you want more clothes.

Mixed economy

economic systems are really mixed

capitalism

government does not control things, we do

Market

individual sells products that individuals buy

Land

is all of the natural resources used to produce goods and services such as fertile land and forests

Labor

is the effort that a person devotes to a task that the person is paid for

If a person chooses to buy a pair of shoes instead of a new jacket, what does the jacket represent in economic terms?

opportunity cost

profit incentive

people produce goods to make a profit

competition

people who make the same thing. Keeps prices down.

Explain the three factors of production

the three factors of production are land, labor, and capital. Land is all of the natural resources used to produce goods and services such as fertile land and forests. Labor is the effort that a person devotes to a task that the person is paid for. Capital are man made resources to produce goods and services.

free enterprise system

this and market are basically the same thing

What economic question is being answered if an industry replaces some workers with machines?

How should they be produced?

Karl Marx predicted that capitalism would collapse and evolve into socialism. The opposite has proved to be true, capitalism has thrived in the world and no society has yet evolved into pare communism. Why do you think this is so?

People want to be free to do what they want, not be controlled by the government

How does scarcity differ from a shortage?

Scarcity is when our needs and wants are bigger than our resources. ( always there ) Shortage is when producers can not offer goods or services at current price.( temporary )

For what purposes do economists use real world data in building economic model?

So you know what products will and won't sell, also knowing will and won't work.

what basic economic question depends on a nation's available natural resources?

What goods and services should be produced?

Capital

are man made resources to produce goods and services

why would the car pictured be exceptionally fuel efficient? (cartoon)

because the car is small

Circular flow of income and outcome

businesses make the product, we buy the product. businesses need people to make the product, so they pay us to make the product.

economic system

way in which a nation uses its resources to satisfy its peoples wants and needs

what is the trade-off to which the man on the left is referring? (cartoon)

you gave up the size of the car for more fuel efficiency

What does making a trade off require you to do?

you have to give up something for something else