Unit 1 Economics
advantages of traditional economy
everyone knows what role to play
what is biofuel?
fuel made from wood, peat, municipal solid waste, straw, corn, tires, landfill gases, fish oil, and other waste
what are the two groups that wants and needs fall into?
goods and services
disadvantages of mixed economy
higher personal income tax
advantages of market economy
individual freedom
what are the five characteristics to a capitalist free enterprise economy? (open response)
individual freedom a variety of goods adapting to change promoting progress creation of wealth
what are the benefits of free enterprise capitalism?
individual freedom, a variety of goods, adapting to change, promoting progress, and creation of wealth
what is supply?
the amount of a product that would be produced, grown, or acquired and offered for sale at all possible prices that could prevail at the market
what is cost-benefit analysis?
the comparison of the cost of an action to its benefits
what is scarcity?
the condition that results from society not having enough resources to produce all the things people would like to have
what is privatization?
the conversion of state owned factories and other property to private ownership
What is gross domestic product?
the dollar value of all final goods and services and structures produced within a country's borders in a 12 month period
what is GDP per capita?
the gross domestic product on a per person basis
what is population density?
the number of people per square mile of land
what does factors of production mean?
the productive resources needed to produce goods
what is standard of living?
the quality of life based on ownership of necessities and luxuries that make life easier
what is total cost?
the sum of variable costs plus fixed costs; all costs associated with productions
what is a traditional economy?
the use of scarce resources and nearly all economic activities
disadvantages of market economy
uncertainty
what is elastic demand?
when a change in prices causes a large change in quantity demand
what is inelastic demand?
when a given change in price causes a small change in quantity demand
what is economics?
The study of how people try to satisfy seemingly unlimited and competing needs and wants, the careful use of relatively scarce resources
what is a need?
a basic requirement for survival
what is microeconomics?
a branch of economic theory that deals with behavior and decision making by small units like individuals and firms
what is a command economy
a central authority makes the major decisions about WHAT, HOW, and FOR WHOM to produce
what is demand?
a combination of quantities that someone would be willing and able to buy over a range of possible prices at a given moment
what is a mixed economy?
an economic system that has some combination of traditional, command, and market economies
what is a free enterprise economy?
a market economy in which privately owned businesses have the freedom to operate for a profit with limited government interference
what is inflation?
a rise in the general level of prices
what is an economic model?
a simplified version of a complex concept or behavior expressed in the form of a graph, figure, equation, or diagram
examples of traditional economy
african mbuti, australian aborigines
what is total revenue?
all of the revenue that a business receives
what is trade off?
an alternative that must be given up when one choice is made rather than another
what is socialism?
an economic and political system in which the government owns some but not all factors of production
what is capitalism?
an economic system in which private citizens own and use the factors of production in order to generate profits
what is a market economy?
an economy where WHAT, HOW, and FOR WHOM questions are primarily answered by people who make supply and demand decisions
examples of market economy
australia, canada, great britain, japan, south korea, western europe, and the us
advantages of command economy
can change direction drastically
what are 6 out of the 8 factors that can cause a change in supply? (open response)
cost of resources productivity technology taxes subsidies government regulations number of sellers
disadvantages of traditional economy
discourages new ideas and new ways of doing things
what are four types of good? (open response)
durable goods non durable goods consumer goods capital goods
what are 5 out of the 7 major economic and social goals? (open response)
economic freedom economic efficiency economic equity economic security full employement
what are the four factors of production? (open response)
land capital tools, equipment, machinery, etc. labor people with all their efforts, ability, and skills entrepreneurship
disadvantages of command economy
no reward of individual initiatives
examples of command economy
north korea, cuba, vietnam, USSR
advantages of mixed economy
not restricted to communist controlled command economies
what are the five consumer rights?
right to safety right to be informed right to choose right to be heard right to redress
what is a want?
something we would like to have but it is not necessary for survival