Unit 9 - What is Economics?
Socialism
An economy in which government owns some factors of production so it can distribute products and wages more evenly among its citizens; economic system with some command features
Specialization
Assignment of tasks to workers or factories that can perform them most efficiently
Factors that Affect Demand
Number of consumers increases Consumer incomes rise Consumer preferences change
Factors that Affect Supply
Number of suppliers Costs of production
Human Capital
People's knowledge and skills used to create products
Scarcity
a limit or shortage in resources or products
Product Market
a market where goods and services are bought and sold
Factor Market
a market where productive resources (land, labor, capital) are bought and sold
Circular Flow Model
a model showing how goods, services, resources, and money flow among sectors and markets in the American economy.
Market
a place where a buyer and seller voluntarily exchange money for a good or service.
Economics
a system of buying, selling, and using goods by all members of society and the careful management of money, supplies and materials to ensure that this cycle can continue to meet the needs and wants of society.
Goods
a tangible or physical product that someone will buy. Tangible meaning something you can touch.
Benefit-Cost Analysis
a way to help you make smart economic decisions by dividing the size of the benefit by the cost
Resources
are all things that can be used in making products or services that people need and want.
Needs
are basic requirements for survival such as food, clothing, and shelter
Wants
are desires that people have that can be met by getting a product or a service
Entrepreneurs
are risk-taking individuals who start a new business, introduce a new product, or improve a method of making or doing something.
Division of Labor
breaking down of a job into separate, smaller, tasks to be performed individually
Consumer
buys or uses goods and services
Market Economies
economic system in which individuals and businesses have the freedom to use their resources in ways they think best.
Mixed Market Economies
economic system in which markets, government, and tradition each answer some of the WHAT, HOW, and FOR WHOM questions.
Command Economies
economic systems in which the government owns and directs the majority of a country's land, labor, and capital resources.
Traditional Economies
economics systems in which the decisions of WHAT, HOW, and FOR WHOM are based on traditions or customs.
Natural Resources
include a nation's land and all of the material nature provides that can be used to make goods or services.
Labor
includes workers and their abilities.
Sector
part or category distinct from other parts
Equilibrium Price
price when supply and demand are equal
Producer
provides those goods and services
Economic Systems
the way of producing and distributing the things people need and want.
Surplus
when the amount supplied by producers is greater than the amount demanded by consumers
Rationing
when we allow people to have a certain amount of something
Services
when you pay for a skill
Three Basic Economic Questions
1. What to produce? 2. How to produce? 3. For whom to produce?
Capital
Includes buildings and tools
Communism
Theoretical state where all property is publicly owned, and everyone works according to their abilities and is paid according to their needs
Voluntary Exchange
the act of buyers and sellers freely and willingly engaging in market transactions.
Demand
the amount of a good or service that people (consumers) are willing and able to buy at various prices during a given time period.
Supply
the amount of a good or service that producers are willing and able to sell at various prices during a given time period.
Opportunity Cost
the cost of the next best use of your money or time when you choose to do one thing rather than another
Productivity
the degree to which resources are being used efficiently to produce goods and services
Producer Surplus
the difference between the price the seller received and how much they were willing to sell it for.
Consumer Surplus
the difference between what you are willing to pay and what you actually pay.
Economic Growth
the increase in a country's total output of goods and services over time.
Standard of Living
the material well-being of an individual, group, or a nation as measured by how well needs and wants are satisfied.
Price
the monetary value of a product.