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| the study of how we make decisions in a world in which resources are limited |
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| economic behavior and decision-making by inidividuals and small businesses; small picture |
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| economic behavior and decision making by government or whole industries or socities; big picture |
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| things we would like tohave |
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| occurs when not enough resources to produce things we would like to have |
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| Three choices all societies face |
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what to produce
how to produce
for whom to produce |
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| How are most goods and services in the US distributed? |
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| all activity in a nation that together affects production, distribution, and use of goods and services |
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| study specific parts of economy they formulate theories and gather data |
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| simplified resprsentations of real world that are used to explain how economy works, or to predict what would happen if something in economy should change |
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| What leads to decision making? |
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| What forces societies to make rational decisions about production and the use of their resources |
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| cost of the next best use of your time or moneywhen you choose to do one thing rather than another |
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| When an economic choice is made what is lost? |
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| the oppurtunity to choose alternatives |
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| What is the true cost of an economic choice? |
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| what person is willing to give up to obtain something |
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| costs or expenses that are the same no matter how many units of goods are produced |
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| What are the only to fixed costs? |
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mortgage/rent
property tax |
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| expenses that changed with the number of products produced |
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| extra or additional cost of producing one additional unit of output |
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| number of units sold multiplied by average price per unit |
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| change in total revenue that results from selling one more unity |
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| hat are the two ways of measuring revenue? |
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| this analysis requires you to compare the cost and benefit of a decision |
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| choose an action when the benefits are greater than the costs |
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| What is the purpose of cost-benefit analysis? |
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| helps you make a sound economic decision |
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| Four factors of production |
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land
labor
capital
entrepreneurs |
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| 3 ways landowners earn money from property |
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charging rent
leasing
selling |
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| resources that can be replenished time after time |
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| resources such as minerals and fossil fuels, cannot be replaced when all supplies are used |
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| person's potenetial for economic productivity |
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| an investment resource used in production |
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| goods that can be used in production of different products |
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| resource that brings land, labor, and capital together by starting, operating, and expanding |
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| reward for economic risk to entrepreneurs |
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| statistics used to judge an economy's health or where economy is in business cycle |
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| predictable long-term pattern of changes in the national economy |
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| 4 parts of the business cycle |
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peak
recession
trough
expansion |
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| GDP is expressed in terms of... |
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| two types of goods not counted in GDP |
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| goods that go into making of other goods |
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| If GDP is higher than previous year, economy is... |
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| quality of life based on possession of necessities and luxuries that make life easier |
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| a location or other situation that allows buyers and sellers to exchange a certain economic product |
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| What makes up 76% of GDP? |
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| What makes of 20% of GDP? |
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| three level of government |
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| Government's most revenue comes from? |
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| measure of the amount of output produced by a given amount of inputs in a specific period of time |
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| breaks down a job into a series of specific tasks for maximum production; each worker focuses on one or a few tasks |
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| refers to specific task and skills that an individual contributes to division of labor |
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| uses division of labor and specialization |
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| 2 things that the US economy is built largely on |
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free markets
private ownership |
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| an economic system in which private citizens own and use factors of production to seek a profit |
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| an economy in which competition is allowed to flourish with a minimum of government interference |
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| What is the strongest incentive in making economic choices? |
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| choices of consumers influence economy more than choices of produces |
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| Who is the ruler of the market? |
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| freedom to own and use our property as we choose as long as we do not interfere with rights of others |
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| struggle that goes on between buyers and seller to get best products at lowest prices |
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| driving force that encourages individuals and organizations to improve their material well-being |
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| act of buyers and sellers freely and willingly engaging in market transactions |
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| What book believes that individuals, in seeking profit, end up beneifitng society as a whole? Who wrote it? |
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The Wealth of Nations
Adam Smith |
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| french term that measn let them do |
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| Smith believed that capitalism would meet needs of society through what |
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