Chapter 1
The basic economic problem is:
scarcity
The rivalry among businesses to sell their goods and services is called:
competition
Owned and controlled by two or more people:
The U.S. uses this type of economic system
market economy
What are the three types of economic resources?
Natural, human, capital
The quantity of a good or service that consumers are willing and able to buy:
demand
What is the equation for unemployment rate?
# of people unemployed / labor force
The form of ownership most common among U.S. businesses is:
proprietorship
How is the market price determined?
where supply and demand are equal
Only ______ goods are counted when GDP is measured.
final
What is the difference between a surplus and a shortage?
Surplus: supply > demand
Shortage: demand > supply
What is the difference between inflation and deflation?
Inflation: general increase in level of prices
Deflation: general decrease in level of prices
People who become part owners of a corporation are called:
Shareholders
Those who buy and use goods and services are called:
consumers
Define labor force
the labor force consists of all people above age 16 who are actively working or seeking work.
What are the three economic questions?
What goods and services will be produced?
How will the goods and services be produced?
What needs and wants will be satisfied with the goods and services?
What are the four stages of the business cycle?
Recovery
Prosperity
Recession
Depression
Define franchise. Provide three examples of a franchise.
A franchise is a written contract granting permission to operate a business to sell products/services in a set way. This is a way of expanding investments while maintaining control of name, product quality and operating procedures.
This type of business ownership is managed by a board of directors:
corporation
This business ownership is the easiest form of business to start and run:
proprietorship
What are the six steps in the economic decision-making process?
Define the problem
Identify the choices
Evaluate the advantages and disadvantages of each choice
Choose the best alternative
Act on your choice
Review your decision
How do you calculate GDP?
Consumer spending + business spending + government spending + net imports/exports
What are the six business activities?
Generating ideas
Raising capital
Employing & training personnel
Buying goods and services
Marketing goods and services
Maintaining business records
Scenario: A tornado hits a corn field, ultimately destroying all of the corn on the farm.
Does this affect the supply or demand of corn?
Will this increase or decrease the supply/demand of corn?
How will this affect the price of corn?
Increase in price of corn
Scenario: Due to Covid-19, many families decided to purchase a puppy.
Does this affect the supply or demand of dog food?
Will this increase or decrease the supply/demand of dog food?
How will this affect the price of dog food?
increase in demand
increase in price