Social Studies - Economics Flashcards
the study of how goods are produced, distributed, and consumed
economics
although the resources available can differ from person to person, no human has all of the resources necessary to fulfill every one of his needs and desires
scarcity
trade-offs and decisions as to best allocate their resources
cost-benefit analysis
not about money, but about the general use of resources; refers to the cost of the next best-forgone opportunity ; because all resources are scarce, all actions have an opportunity cost
opportunity cost
holds that the more gold a nation has, the better and stronger its economy and global power; views the world as having a finite amount that all nations must share; created an inherently competitive global economy ; a nation’s wealth is determined by the amount of its exports compared to its amounts of imports
mercantilism
structure focused on enriching the parent country- even at the expense of colonies; colonies were not encouraged to trade with other countries just the parent country; focused heavily on exporting more than importing
national economy
3 types of economic systems developed to manage the flow of goods:
Capitalism, communism, socialism
economic system where the means of production (resources used to produce goods) are privately owned and operated to make a profit, marker economy where free individuals use their resources to dictate price, demand, quality, and quantity through the purchasing of product; freest/ least regulated type of economy; greater social mobility
Capitalism
father of capitalism, wrote “an inquiry into nature and causes of wealth and nations”; said mercantilism did not maximize best interest of he individual or country; argued that when individuals seek their own interest, an invisible hand guides the economy to its greatest productivity; revolutionized economic thinking
adam smith
states that the economy is not led by an entity, but rather it is the result of the collusion of individuals acting in their own self interest (capitalism)
invisible hand theory (adam smith)
- economic system where the state owns all of the means of production and manages it in order to ensure everyone benefits equally from the economy
- seeks to eliminate classes by establishing popular ownership of the means of production
- eliminates need for wages and private property
communism
communism originated with the publication of Communist Manifesto by
Karl Marx
- economic system in which the people, represented by the government, control the means of production
- spectrum with most countries falling somewhere along it
- refers to public ownership of resources and allocation of those resources by the government to best meet the demands of society
- falls between capitalism and communism because although government controlled, the functioning of the economy, market decide or measure, and allocation of goods
- characterized by high taxes, redistribute wealth from the rich to the poor, and complex tax systems to create financial incentives
- goal in socialism is to eliminate or minimize social classes and poverty ; gov provides many basic necessities of life and heavy regulation is placed upon the economy c
Socialism
space in which goods are exchanged
market
market where products are almost exactly the same and there are infinite competitors
pure competition (perfect competition)
market where many firms are present and the distinction of the products results in increased prices that drives innovation
monopolistic competition
market where only a few sellers are present
oligopoly
market where one firm controls the price, production, and supply of a good
monopoly
price is determined by two factors
supply and demand
states that as the price of a good increases, the less quantity will be demanded for the good
law of demand
states that as the price of a good increases, the more quantity will be supplied of the good
law of supply
