Economic Systems
An economic system in which decisions about production and consumption are made by a powerful ruler or government
What is a command economy?
An economy has to balance competing priorities, such as protecting individual choice, using resources wisely, promoting fairness, maintaining stability, providing protection from economic hardships, and increasing its ability to produce goods and services. These priorities are known as this.
What are the 6 economic goals?
Land, Labor, Capital, and Entrepreneurship
What are the 4 factors of production?
a generally accepted medium of exchange that can be traded for goods and services or used to pay debts
What is money?
This economic problem exists because people have unlimited wants but only limited resources to satisfy those wants.
What is scarcity?
This economic system is based on customs, traditions, and practices passed down from previous generations.
What is a traditional economy?
This economic question focuses on how an economy determines who receives the goods and services that are produced.
What is "For whom to produce"
A small clothing company has employees who focus exclusively on cutting fabric, sewing garments, or packaging finished products. Rather than having each employee complete every step of production, each worker concentrates on one particular task. This is an example of this economic concept.
What is specialization?
the money earned by a business after subtracting its operation costs
what is profit?
This is the value of the next-best alternative that is given up when making a choice.
What is an opportunity cost?
An economic system in which economic decisions are left up to individual producers and consumers
What is a Market economy?
This economic question addresses how societies decide which goods and services will be produced with scarce resources.
What is 'what to produce'?
Emily can produce a maximum of 20 T-shirts or 10 hats per day, while Henry can produce a maximum of 15 T-shirts or 15 hats. Based on their production abilities, this person has an absolute advantage in producing T-shirts.
Who is Emily?
the development of skills or knowledge in one aspect of a job or field of interest
what is specialization?
This type of capital includes a construction worker’s hammer.
What is physical capital?
This economic system is the most common in the modern world
What is a mixed economy?
This economic question involves deciding which combination of land, labor, capital, and entrepreneurship will be used in production.
What is 'how to produce'?
By focusing on producing goods in which they have a comparative advantage and then exchanging with one another, countries can achieve this benefit from international trade.
What is increased consumption?
(more goods and services than they could produce on their own)
the condition that exists when someone can produce a good or service using fewer resources than someone else
What is absolute advantage
This type of economics uses facts and data to describe and explain how the economy works.
What is positive economics?
Within a mixed economy is system relies on government involvement to protect individual rights and ensure businesses operate according to established rules.
What is the free enterprise system?
List the 6 economic goals
Efficiency, Equity, Freedom, Growth, Security, & Stability
This economic model illustrates how households and firms interact by showing the flow of resources, goods and services, and money throughout the economy.
What is the circular flow model?
This economic principle determines what individuals should specialize in by comparing the opportunity costs of producing different goods.
What is comparative advantage?
On a production possibilities curve, producing at a point inside the curve represents this economic condition.
What is inefficiency?