Nine weeks exam- Econ

Command economy

A central authority makes what most of the what how and for whom decisions

Production possibilities frontier

A diagram that illustrates the concept of opportunity cost. Represent various combinations of goods and services and economy can produce when all productive resources are fully employed

Social security

A federal program of disability and retirement benefits that cover most working people

Captialism

A free market economy in which private citizens own the factors of production

Utility

A goods or services capacity to provide satisfaction, which varies with the wants and needs of each person.

Productivity

A measure of the amount of output produced by the amount of input with in a certain time

Inflation

A rise in the general level of prices

Economic system

An organized way of providing for the wants and needs of the people

Economy

An organized way of providing for the wants and needs of the people

Identify the advantages and disadvantages of a command economy

Are the ability to drastically change direction in a relatively short period of time, many basic health and public services are available at little or no cost. Disadvantages the consumer needs may not be met, hard work is not rewarded, the necessary decision-making bureaucracy delays decisions, little flexibility to deal with day-to-day problems, individual initiative is frowned upon

Explain why a society must face the choices of what, how, and for whom to produce.

Because we live in a world of relatively scarce resources, we have to make wise economic decisions

How are roles defined in a traditional economy?

By the customs of the elders and ancestors

Consumer sovereignty

Describes the role of the consumer as sovereign, or ruler, of the market

List the four key elements of economies.

Description, analysis, explanation, and prediction

Want

Desired for satisfaction

What is the difference between a durable goods and a nondurable goods

Durable goods are any good that last longer than three years or more when used on a regular basis (include capital and consumer goods). Nondurable goods are any items that last for less than three years when used on a regular basis (food, clothing)

Describe the seven major goals of the U.S. Economy

Economic freedom is the people to make their own economic decisions. Economic efficiency means that resources are used wisely and that the benefits gained are greater than the costs incurred. Economic equity- fairness. Economic security is a social group that results in programs to help support the ill, elderly, and workers. full employment. Price stability is freedom from inflation. Economic growth is important because populations increase

List the five major characteristics of a free enterprise economy.

Economic freedom, voluntary exchange, private property rights, competition, profit motive

Describe the role of the entrepreneur

Entrepreneurs use land, capital, and labor to make profit. They start new businesses

Economic product

Goods and services that are useful, relatively scarce, and transferable to others

Cost benefit analysis

Help economy evaluate alternatives by looking at each choices costs and benefits

Fixed income

Income that does not increase even though prices go up. Bills are harder to pay and planning for the future is more difficult

Consumer good

Intended for final use by individuals

Capital

Is the means by which something is produced such as, money, tools, equipment, machinery, and factories

Explain why economics is considered a social science.

It deals with the behavior of the people as the deal with this basic issue

Good

Items that are economically useful and satisfy an economic want

Describe the factors of production.

Land is society's limited natural resources such as landforms, minerals, vegetation, animal life and climate. Capital is the means by which something is produced such as money, tools, equipment, machinery and factories. Labor is the workers who apply their efforts, abilities, and skills to production. Entrepreneurs are risk takers who combine land, labor, and capital to new products

Free enterprise

Limited government interference and businesses are free to compete

Market

Locations or mechanisms for buyers and sellers to trade. Classified as local, regional, national, global, and cyberspace

Explain the different transactions that could take place in the product market

Money that individuals receive from businesses in the factor market return to businesses in their product market. Businesses then use this money to produce more goods and services and the cycle through economic activity buying and selling goods and services and using this money to buy more goods

Economic growth

Occurs when a nation's total output increases over time. Sustained period during which a nation total output of goods and services increases

Free enterprise economy

One in which consumers and privately owned businesses, rather than government make the majority of the what, how, and for whom decisions

Mixed economy

People carry on their economic affairs freely, but are subject to some government intervention and regulation

Market economy

Producers and consumers determine what how and for whom to produce

Identify the role of government in a free enterprise economy,

Protector and regulator

Economic interdependence

Reliance on others and their reliance on us to provide goods and services

Need

Required for survival

Factors of production

Resources required to produce the things we would like to have; are land, capital, labor and entrepreneurs

Entrepreneurs

Risk takers who combine the land, labor and capital

Traditional economy

Rose and economic decisions are defined by customs. The allocation of scarce resources and nearly all other economic activity stem from ritual habit or custom

List and describe the three economic choices every society must make?

Society must choose what to produce based on its needs. Society must choose how to produce based on its resources. Society must choose who to produce for based on its population and other available markets.

Describe the characteristics of a traditional economy

Society with the traditional economy, the allocation of scarce resources and nearly all other economic activity stem from ritual, habit, or custom. Habit and custom also dictate most social behavior. Individuals are not for you to make decisions based on what they want or would like to have. Instead their roles are defined by the customs of their elders and ancestors

Land

Society's limited. Aural resources such as landforms, minerals, vegetation, animal life and climate

Specialization

Takes place when factors of production perform tasks they can do relatively more efficiently than others

Division of labor

Takes place when work is arranged so that individual workers do fewer tasks than before

Wealth

The accumulation of goods that are tangible, scarce, useful, and transferable to another person

Voluntary exchange

The act of buyers and sellers freely and willingly engaging in market transactions

Identify the advantages and disadvantages of a market economy

The advantagesare the ability to adjust the change, the high degree of individual freedom, the small degree of government involvement, the ability to have a voice in the economy, the variety of goods and services created, and the high degree of consumer satisfaction the disadvantages are the inability of the market to meet every person's basic needs, in adequate job of providing some of the highly valued services such as justice education and healthcare, A high level of personal uncertainty, and the prospect of economic failure

Describe The relationship between trade-offs and opportunity costs

The alternative choices people Face in making economic decisions. Opportunity cost is the next best alternative among a persons choices.

Trade off

The alternative choices people face in making an economic decision

Scarcity

The condition where unlimited human wants face limited resources

Opportunity cost

The cost of the next best alternative among the persons choices

Gross domestic product

The dollar value of all final goods and services and the structures produced within a country's boarders in a twelve month period

Profits motive

The driving force that encourages people and organizations to improve their material well being. Largely responsible for the growth of a free enterprise system based on capitalism

Profit

The extent to which persons or organizations are better off at the end of a period than they were at the beginning

Private property rights

The privilege that entitles people to own and control their possessions as they wish

Standard of living

The quality of life based on the possession of the necessities and luxuries that make life easier

Paradox of value

The situation were some necessities, such as water, have little monetary value where is us some non-necessities, such as diamonds, have a much higher value

Competition

The struggle among sellers to attract consumers while lowering costs

Economics

The study of how people satisfy their wants with scarce resources

Human capital

The sum of the skills, abilities, health, and motivation of people

Labor

The workers who apply their efforts, abilities, and skills to production

Explain how a market economy determine who will receive the benefits from what is produced and sold

Those who act in their own best interest will receive the benefits

List the three basic economic questions every society must answer.

What should we produce? How should we produce it? For whom should we produce?

Capital good

When manufactured goods are used to produce other goods or services

Factor market

Where the people earn their incomes. Centered on the four factors of production. Markets were productive resources are bought

Service

Work performed for someone and it is intangible

Value

Worth expressed in dollars and cents

Product market

where people use their income to buy from producers. Center on goods and services. Markets where producers sell their goods and services to consumers