Economics

What is an entrepreneur?

A person who takes a risk to produce a good or service in search for a profit.

What is required because of scarcity?

Choices have to made

What is a propriety business?

1 owner Proprietor has all profit The owner has ALL the risks

What is a partnership business?

2+ owners Profit shared between owners Risk shared by owners

What is a cooperation business?

Authorized by law to act as a legal person Owners share profit Investors are owners Only risk is money invested

What determines what is produced?

Available resources and consumer preferences

What may an entrepreneur establish?

Business according to any type of business owners

What are the characteristics of a command economy?

Central ownership Centrally planned economy Lack of consumer choice

What determines what is purchased in the market place?

Consumer preferences and price

Consumer sovereignty

Consumers determine through purchases, what goods and services will be produced.

What are the characteristics of a traditional economy?

Economic decisions based on tradition People often perform the same type of work as their grandparents, regardless of ability or potential

What is key factor in determining the type of economy?

Extent of government involvement

Resources

Factors of production that are used in the production of goods/services.

What are the characteristics of the USA economy?

Free market Private property Profit Competition Consumer sovereignty

Why are choices necessary?

Good and services are limited

Individuals(___) own resources for production. They sell those resources by____. They use that ___to purchase products.

Households Labor Income/wages

What are the characteristics of financial institutions?

Include banks, savings and loans, and credit unions Receive deposits and make loans Encourage saving and investing by paying interests on deposits

What are the characteristics of a mixed economy?

Individual and businesses are owners as a decision marker for the private sector Government is an owner for public sectors A greater government role than free market Most common economic system today +Free market characteristics

All of the economic flow can happen because _____ and ____ ___ and ____ provide _____(money) that can be borrowed for ____ and increase _____.

Individuals Business Saving Investing Financial capital Business expansion Consumption

Private property

Individuals and businesses have the right to own real and personal property as well as the means of production without undue interference from the government.

If price goes DOWN, what happens to SUPPLY?

It goes DOWN

If prices goes UP, what happens to DEMAND?

It goes DOWN

If price goes DOWN, what happens to the DEMAND?

It goes UP

If price goes UP, what happens to the SUPPLY?

It goes up

What does the use of technology do?

Lowers cost of production

Free market

Markets allowed to operate without undue interference from the government. Prices are determined by supply and demand as buyers and sellers interact in the marketplace.

When does the the government intervene in a market economy?

ONLY when the perceived benefits of a government policy outweigh the anticipated costs

What economy is the USA?

Primarily free market but it is a Mixed market

What are the characteristics of a free market?

Private owner of property/ resources Profit motive Consumer sovereignty Individual choice Competition Minimal government involvement

Business(___) buy resources (___). They make products that are sold to___, ____, and use the ___ to buy more___.

Producers Our labor Individuals Other business Profits Resources

Profit

Profit consists of earnings after all the expenses have been paid.

What are the three basic types of business ownership (least to most complicated)

Proprietorship Partnership Cooperation

Competition

Rivalry between producers/sellers of a good or service results in a better quality goods or services at a lower price.

Choice

Select an item or action from a set of possible alternatives.

Governments use___ from____ and ____ to provide ____ goods and services.

Tax revenue Individuals Businesses Public

Supply

The amount of a good or service that producers are willing and able to sell at a certain price

Demand

The amount of good or service that consumers are willing and able to purchase at a certain price

Price

The amount of money exchanged for a good or service

Production

The combing of human, natural, Capitol, and entrepreneurship resource to make goods or provide services

Opportunity cost

The cost of choosing the highest valued alternative forgone (given up)

What do innovations in technology contribute to?

The global flow of information, Capitol, goods and services

Scarcity

The inability to satisfy all wants at the same time. All resources and goods are limited.

What determines price?

The interaction of supply and demand

What do Virginia and the U.S. specialize in?

The production of certain goods and services, which promoted efficiency and growth

What must individuals consider when making a choice?

The value of what is given up

Incentives

Things that incite or motivate

What are incentives used for?

To change economic behavior

Why do states and nations trade?

To obtain goods and services they cannot produce efficiently themselves To buy goods and services at a lower cost or opportunity cost To sell goods and services to other countries To create jobs

Consumption

Usage of goods and services

What are the three basic questions of economics?

What will be produced? Who will produce it? For whom will it be produced?

What does the price determine?

Who acquired the product

What is the global economy?

Worldwide market in which the buying and selling of goods and services by all nations take place.

Is the price a person pays for a good the opportunity cost?

Yes