Term
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Definition
| the study of how individuals, businesses (sometimes called firms), and nations can best allocate their limited resources |
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| either things people must have to live (food, shelter, clothing, etc.) or goods and services one desires and would obtain if he or she could |
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| those things which humans can put to productive use |
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| all raw materials in nature used to produce what huans need or want |
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| Renewable Natural Resource |
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Definition
| resource that can be replenished or replaced over time |
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| Nonrenewable Natural Resource |
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Definition
| resource that cannot be replenished over time |
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| Four Basic Productive Resources (Factors of Production) |
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Definition
| land, labor, capital, entrepreneurship |
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| all natural resources involved |
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| contribution of human workers to the production process |
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| all the structures and equipment involved in the manufacturing process |
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| a specific form of labor that consists of the creative, managerial, and risk-taking capabilities that are involved in starting up and running a business |
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| the lack of adequate resources to obtain all of one's wants |
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Definition
| solution for scarcity; higher prices reduce the level of demand |
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Definition
| another means of dealing with scarcity |
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Definition
| a certain price above which the price of a certain good or service is not allowed to rise (ex. gas is not allowed to cost more than $10 per gallon) |
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Definition
| a certain price below which the price of a certain good or service is not allowed to drop(ex. beef must always cost at least 99 cents per pound) |
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Definition
| only allowing citizens to purchase so much of a scarce good to guarantee there is enough to go around (ex. During WWII, certain goods were rationed so that the military would have enough supplies) |
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Term
| Economic Decision-Making Proces |
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Definition
Define the problem.
List the alternatives.
State the criteria (requirements).
Evaluate the alternatives.
Make a rational decision. |
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Term
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Definition
| the act of giving up one thing of value to gain another thing of value |
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| the value of the alternative option that is lost when an individual, business, or government makes a decision |
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| the amount of benefit a person, business, or government receives once the cost of their decision is considered |
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| the cost of the decision once it is weighed against the benefits |
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Definition
| the money that producers make after they have paid for all of their costs |
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Term
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Definition
| devotion of resources to a specific task |
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Term
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Definition
| the ability to turn input into output in a certain amount of time |
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Definition
| the act of splittign up work into samaller and more specialized tasks |
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Definition
| a system in which individuals and businesses freely choose to exchange goods, services, resources, and so forth for something else of value (usually money) |
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| Benefits of Voluntary Exchange |
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Definition
*encourages increased productivity and efficiency
*encourages new technological inventions and innovations |
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Term
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Definition
| new products that perform a task of fulfill a need that no previous product could perform or fulfill, or at least could not perform nearly as well |
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Term
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Definition
| any invention or change in a process that greatly improves something that already exists |
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| Traditional Economic System |
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Definition
*laborers usually produce only what they need to survive
*wealth is passed from one generation to the next within a small wealthy class, leaving little room for advancement from lower classes |
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Definition
| government owns most property and means of production and makes all economic decisions; distribution is based on equity which leaves little profit motive |
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| the incentive to produce that drives prodution |
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Definition
| producers and consumers determine what gets made and for whom; property is privately owned |
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Term
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Definition
| economic system that has elements of more than one system |
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Term
| Public Goods and Services |
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Definition
| examples: military, police and fire protection, public parks, etc. |
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Term
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Definition
| the government takes money from citizens who have it (usually through taxes) and give it to citizens who don't (normally through welfare programs) |
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Term
| Resolving Market Failures |
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Definition
| things the government will do to help the economy recover from a downfall |
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| Common Ways the Government Tries to Regulate the Economy |
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Definition
| tariffs (taxes on foreign imports), actions by the Federal Reserve (nation's central bank), subsidies (money paid to make up for losses in an idustry), environmental regulations, workplace safety guidelines, and consumer protection laws |
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Definition
| ability to own one's own property |
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Definition
| stop or decrease government regulation |
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Definition
| all factors of production that go into producing a good or service |
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Definition
| the amount of good or service produced |
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Definition
| using resources that could bring immediate benefits for the purpose of gaining greater benefits at a later time |
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Definition
| money paid to an investor in exchange for the use of their money |
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Definition
| investment in capital goods and human capital |
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Definition
| those products used to make other goods or provide services |
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| Higher Standard of Living |
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Definition
| they make more money and can afford more things than less-educated workers |
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