Term
| What are factors of production? What are the four factors of production? |
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Definition
| resources required to produce the things we would like to have; capital, entrepreneurs, land, labor |
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Term
| Describe the four factors of production. |
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Definition
land-natural resources not created by people. Capital-the tools, equipment, machinery and factoriies used in production of goods and services.
labor-people with all their efforts, abilities, and skills. Entrepreneur-a risk taker in search of profits who does something new with existing sources |
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Term
| What is opportunity cost and what is an example of it? |
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Definition
- the next best thing not chosen
- going to college--the opportunity cost would be four years of your life that can be spent doing something else
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Term
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Definition
| the condition that results from society not having enough resources to produce all the things people would like to have |
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Term
| What is the significance of scarcity? |
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Definition
| ecnomics results from people trying to satisfy seemingly unlimited and competing wants thorugh the use of scarce resources |
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Term
| What are needs and wants and what are some examples of each? |
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Definition
| needs are few, wants are infinite. needs are essential for life. need--food and water. want---week long ski vacation. |
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Term
| What is the production possibilites fronteir? |
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Definition
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Term
| Capital is the ____, _____, _____, and _____used in the production of ____and _____. |
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Definition
| the tools, equipment, machinery and factories used in the production of goods and services |
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Term
| What is an example of capital? |
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Definition
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Term
| What is a product market? |
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Definition
| place where producers selll their goods and services. |
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Term
| what is the significance of a product market? |
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Definition
| wages and salaries that people receive from businesses in the factor markets returns to business in the product markets. businesses use this money to produce goods and services and the process repeats itself |
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Term
| What does "the invisible hand" mean? |
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Definition
| self interest + free competition. Consumers are free to decide what they want to buy and sellers are free to decide what they want to sell and these two coincide with each other. Another example would be that inhabitants of a poor country will be willing to work cheaply so entrepeneurs will make a lot of profit from building factories in poor countries. |
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Term
| What is division of labor? |
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Definition
| a way of organizing work so that each individual worker completes a separate part of the work. |
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Term
| What is an example of division of labor? |
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Definition
| a worker who performs a few tasks many times a day is likely to be more proficient than a worker who performs hundreds of different tasks in the same period |
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Term
| When does specialization tkae place? |
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Definition
| when workers perform only tasks they can do better or more efficiently than others. |
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Term
| What is an example of specialization? |
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Definition
| the assembly of a product may be broken down into a number of separate tasks and then each worker can perform the specific task that he or she does best which is where specialization comes into play |
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Term
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Definition
| the tools, equipment, machinery, and factories used in the production of goods and services. Capital goods are a result of production. |
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Term
| What are two examples of capital goods? |
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Definition
| a bulldozer used in construction; computers in schools that are used to produce the service of education |
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Term
| What are consumer goods and what is an example? |
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Definition
| goods intended for final use by individuals; an example would be an automobile |
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Term
| What are durable goods? what is an example? |
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Definition
| a good that lasts more than three years; an example would be a robot welder or an automobile |
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Term
| What is a normal good and what is an example? |
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Definition
| any good whose usage goes up as incomes rise . an example would be an expensive ski vacation. most goods are normal goods |
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Term
| What are inferior goods? example? |
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Definition
| any good whose usage goes down as incomes rise; an example would be busses or ramen noodles |
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Term
| What is a non durable good? example? |
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Definition
| an item that lasts for fewer than three years when used on a regular basis; an example of this would be food and most clothing |
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Term
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Definition
| products that are collectively consumed by everyone; their use by one individual does not diminish the satisfaction of value available to others |
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Term
| What is are two examples of public goods? |
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Definition
| national defense, interstate highway system |
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Term
| What is a traditional economy? |
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Definition
| the use of scare resources stems from ritual, habit, or custom. habit and custom also dictate most social behavior. |
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Term
| example of traditional economy? |
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Definition
| the Australian Aborigine or teh Inuits of northern canada. the inuit taught children how to survive in harsh climates which is one part of a traditional economy |
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Term
| What is a market economy? What is it characterized by? what do people spend money on? what is it based on and why? there is a relatively small degree of? |
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Definition
| people make decisions in their own best interest. a market economy is charaterized by freedom. people can spend their money on the products they want most. it is based on capitalism because private citizens own the factors of production. thehre is a relatively small degree of government influence. |
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Term
| What is an example of a market economy? |
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Definition
| United states, japan, and south korea |
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Term
| What is inflation? how does this affect people on fixed income? |
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Definition
| a rise in the general level or prices or the decreasing purchasing power of the dollar; when this occurs people who live on fixed income which is an income that does not increase even though prices go up find that bills are harder to pay and planning for the future is harder. |
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Term
| When there is full employment there is no____anymore. |
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Definition
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Term
| Whta does full employment mean? |
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Definition
- the level of employment is at the natural rate
- everyone who is able to work is employed
- congresss passed the employment act of 1946 in order to avoid the widespread joblessness after world war II.
- waithout jobs, people cannnot support themselves or their families nor can they produce output for others
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Term
| What is a command economy? |
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Definition
- a central authority makes the major decisions on what, how, and for whom to produce
- can be headed by a king, dictator, president, etc
- the government makes the major decisions like if houses or apartment can be built
- they severely limit private property rights
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Term
| What are two modern examples of command economies? |
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Definition
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Term
| What is an advantage to a command economy? |
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Definition
| many helath and public services are available to everyone at little or no cost |
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Term
| When does a market failure occur? |
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Definition
| whenever one of the conditions necessary for competitive markets does not exist |
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Term
| What are the five conditions necessary for competitive markets? What will happen if one does not exist? |
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Definition
- large number of buyers and sellers
- buyers and sellers deal in identical products
- each buyer and seller acts independently
- buyers and sellers are reasonably well informed about products and prices
- buyers and sellers are free to enter into, conduct, or get out of business
- if one of these does not exist, a market failure will occur
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Term
| Why are five other reasons why markets sometimes fail? |
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Definition
- inadequate competition
- inadequate information
- resource immobility
- public goods
- externalities
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Term
| What is voluntary exchange? |
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Definition
| the act of buyers and sellers freely and willingly engaging in market transactions |
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Term
| What would be an example of voluntary exhange? |
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Definition
| when buyers spend their money on a product, they act on a belief that the item they purchase is of greater value than the money they give or they would not make the purchase. When sellers exhange their products for cash, they believe that the money they receive is more valuable than the product they sell otherwise they would not make the sale |
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Term
| What is an entrepreneur? An entrepreneur organizes and mananges ____, ____, and _____in order to seek profit. |
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Definition
- a person that takes a risk to start up a new business such as a restaraunt, internet store, or video arcade. Entrepreneurs want to "be their own boss" and are willing to take risks to make their dreams come true.
- land, capital, labor
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Term
| Who are three examples of well known entrepreneurs? |
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Definition
- robert johnson- founder of BET
- bill gates-founder of microsoft
- mary kay ash-founder of mary kay cosmetics
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Term
When an entrepreneur is successful, everyone benefits...how?
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Definition
| the entrepreneur is awarded with profit; workers are rewarded with more and better paying jobs; and cosumers are awarded with new and better products |
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Term
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Definition
| a measure of the value of output economy adjusted for price changes (inflation or deflation); it also identified as GDP measured with a set of constant base year prices |
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Term
| What are intermediate products? |
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Definition
| when goods used to make other products that are already counted in GDP are excluded from GDP |
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Term
| What are some examples of intermediate products? |
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Definition
| when you buy a car, the tires that come with that car are counted in GDP because they were intended for final use by the customer and were not combined with any other parts to make a new product. But the new tires that you put on to replace thsoe tires are not counted in GDP. Another example would be flour and sugar. Flour and sugar are only counted in GDP if they are bought for final use by the customer. but if a baker buys them to make bread for sale, only the value of the bread is counted |
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Term
| What is cylcical unemployment? what starts it? |
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Definition
| precipitated by a downturn in the economy; it is when people are willing and able to work but are currently out of work. There is not enough demand in the economy to provide jobs for everyone who wants to work |
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Term
| What is structural unemployment? |
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Definition
| when economic progress, a change in consumer tastes, or a fundamental change in the operations of the economy reduces the demand for workers and their skills |
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Term
| What is an example of structural unemployment? |
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Definition
| the invention of the automobile which left skilled buggy whip makers out of work; or the invention of "self check out" at grocery stores puts many cashiers out of work |
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Term
| What is the business cycle? |
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Definition
- there are two phases
- the first is recession--a period when real GDP declines for at least two quarters in a row.
- the recession begins when the economy reaches a peak and ends when the economy reaches a trough which is the turnaround point when GDP stops going down
- The second phase is the expansion phase which is a period of recovery from a recession until the economy reaches a new peak
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Term
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Definition
| the period when real GDP declines for at least two quarters in a row |
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Term
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Definition
| a period of recovery from a recession until the economy reaches a new peak |
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Term
| What is the civilian labor force? What does the civilian classification exclude? |
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Definition
- men and women who are 16 years old and over who are either working or actively looking for a job
- excludes the prison population, other institutionalized persons, and members of the armed forces
- 12. 5% of Americans are in the labor force
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Term
| What is frictional employment |
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Definition
| the situation where workers are between jobs for one reason or another. This is usually a short term condition and workers suffer little economic hardship. There is always some friction unemployment |
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Term
| What is an example of frictional unemployment? |
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Definition
| a recent college graduate who has become available in the job market but has yet to find his first job |
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