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.