Chapter 2 Flashcards
(42 cards)
Define Economics
The study of how a society uses scarce resources to produce and distribute goods and services
What is the difference between microeconomics and macro economics
microeconomics- focuses on individual parts of the economy, such as households or businesses
Macroeconomics- focuses on the economy s a whole by looking at aggregate data for large groups of people, companies, or products.
What are the 5 Factors of Production
The resources used to create goods and services, including natural resources, labour, capital, entrepreneurship, and knowledge
What are natural resources
Commodities that are useful inputs in their natural state
Define Labour
Economic contributions of people
Define Capital
The inputs used to produce goods and services and get them to the customer. ex) tools, machinery, equipment, buildings
Define Entrepreneurs
People who combine the inputs of natural resources, labour, and capital to produce goods and services with the intention of making profit
What is Entrepreneurial thinking
Thinking like an entrepreneur
Define Knowledge
The combined talents and skills of the workforce
What is Circular flow
The movements of inputs among households, businesses, and governments; a way of showing how the sectors of the economy interact.
What are the steps of Economics as a circle of flow
- House holds provide inputs
- Businesss convert theses inputs into outputs for consumers to purchase
- consumers receive income through the resource market
- Businesses receive income from consumer purchases of goods
What is the economic system
The combination of policies, laws, and choices made by a nations government to establish the systems that determine what goods and services are produced and how they are allocated
What are the major differentiations among economic systems
- best satisfy unlimited societal needs
- choose what goods and services to produce and in what quantities
- determine how to produce these goods and services and who will produce them
- distributed goods and service to consumers
Define market Economy
An economic system based on competition in the marketplace and private ownership of the factors of production
What is market economy based on
based on competition in the marketplace and private ownership of the factors of production
What does a market economy guarantees
- right to own property
- right to make profit
- right to make free choice
- right to compete
What are primary economic systems
Market Economy- Private: Free capitalism, let the market decide price
Command Economics- Government owns all the means of production
Socialism- government decides to own some of the key industries (ex. Healthcare)
Mixed Economics- a blend of both private and government owned businesses
Define market structure
The number of suppliers in a market
What are the four market structures and define them
Perfect competition- Large numbers of small firms. Ex. farming
Monopolistic competition- many firms Ex. iPhone and Samsung (owning a specific technology but competing against each other)
Oligopoly- Few firms ex. Banks
Pure Monopoly- One firm
Define Demand
The quantity of a good or service that people are willing to buy at various prices
What is a demand curve
A graph showing the quantity of a good or service that people are willing to buy at various prices
Define supply
The quantity of a good or service that businesses will make available at various prices
define equilibrium
The point at which quantity demanded equals quantity supplied
What does (GDP) stand for and what is it
Gross domestic product
The total market value of all final goods and services produced within a nations borders in a year
