Terms
The set of mechanisms and institutions that resolve the what, how, and for whom questions for an economy
what is economic system
organizing the production of goods into separate tasks to be carried out by separate workers
what is division of labor
the means by which buyers and sellers carry out exchange
what is market
private firms account for all production
what is a pure market economy
only people who are the most efficient producers of a product can benefit from specialization
what is law of comparative advantage
ability to make something using fewer resources than other producers require
what is absolute advantage
Anything that everyone is willing to accept in exchange for goods and services
what is money
the value of the best alternative passed up for the chosen item or activity
what is opportunity cost
everything is government-owned
what is a pure centrally planned economy
system in which products are traded directly for other products
what is a barter system
The worker, firm, region, or country with the lowest opportunity cost of producing a particular output should specialize in that output
what is law of comparative advantage
producing the maximum possible output from available resources
what is efficiency
all human creations used to create goods and services
capital goods
mixing central planning with competitive markets
mixed economics
applies to individuals but also firm, regions of countries, and entire nations
what is law of comparative advantages
economic system with no government so firms account for all production
what is pure market economy
shows the possible combinations of two types of goods that can be produced when available resources are employed fully and efficiently
what is production possibilities frontier
gifts of nature
what are natural resources
US is a mixed economy but is also considered...
what is market economy
must decide what goods will be produced from the resources they have
what are all economic systems
economic system combining aspects of central planning and competitive markets
what is a mixed economy
An expansion in the econmy's ability to produce
what is economic growth
a profit seeker who develops a new product or process and assumes the risk of profit loss
what is an entreprenuer
shifting orientation from central planning to competitive markets
what is transitional economies
often referred to as the distribution question
what is for whom