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Definition
| physical objects we can acquire |
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Definition
| something one person can perform for another |
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| all natural resources that go into production |
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| work for which people are compensated |
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| human-made resource used to make other good and services |
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Physical Capital
Capital Goods |
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Definition
| human-made objects used to produce other goods |
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| knowledge and skills people gain from study and experience |
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| people who put together land, labor, and capital to create new businesses |
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| alternatives we give up when we choose one course of action |
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| a term used to describe a country that chooses to produce more military goods than consumer goods |
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Term
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| the most desirable alternative given up as a result of making the choice |
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| deciding about adding or subtracting one unit of a resource, such as one hour of sleep. The decision is between sleeping or studying. Compare the Opp. Cost and benefit of each extra hour of studying |
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Term
| Production Possibility Curves |
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Definition
| shows alternative ways of using a country's resources. Can show how the number of shoes produced is affected by the number of watermelons grown |
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Term
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Definition
| an economy is using resources in such a way as to maximize the production of goods and services |
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| Production Possibilities Frontier |
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Definition
| maximum possible production on a production possibilities curve |
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| using fewer resources than an economy is capable of |
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Term
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Definition
1) What goods and services should be produced?
2) How should these goods and services be produced?
3) Who consumes these goods and services?
*Must consider economic goals* |
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Definition
| method a society uses to produce and distribute goods and services |
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relies on custom to make most economic decisions (kids follow in their parents' footsteps)
little innovation or change |
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Definition
economic decisions are made by individuals and are based on exchange or trade
known as the Free Market |
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Term
| Centrally Planned Economy |
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Definition
| the government makes most economic decisions |
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Term
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Definition
| allows buyers and sellers to exchange goods and services |
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Term
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Definition
| buyers and sellers are focused on personal gain. It motivates consumers to buy the goods and services they want at the lowest prices possible |
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Term
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Definition
the struggle among producers for the dollars of consumers
it keeps prices low as firms attempt to make prices attractive to consumers |
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Definition
firms purchase land, labor, and capital from households
rent land, hire workers, and borrow money from investors |
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| households purchase goods and services produced by firms |
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Definition
Socialists attach great value to the goal of economic equity. They believe that economic equality is possible monly if the public controls the economy. Can be a democracy
Communists believe much of this as well, but believe that these goals can only be achieved through violent revolution. Individuals lack personal freedom |
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Term
| Markets also have limitations: |
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Definition
| They do not provide answers for some of society's needs such as the ned for defense, education, and fast transportation routes. The gov't does this and also enforces property rights and rules against competition |
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Term
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Definition
| range with no clear divisions of economic systems |
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Term
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Definition
| an economy with little government involvement and a great deal of economic freedom |
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