Terms
Describes the characteristics of a product that
satisfy wants and needs
Utility
Land, labor, capital, and entrepreneurship
Factors of production
A competitor just released a similar product that’s more eco-friendly and faster to make.
Production
Businesses provide products to meet a
need or want
A local farmer is part of a community where the types of crops grown, and the methods used, have been passed down through generations. When a new technology is introduced that could increase crop yield, the community decides not to adopt it. This is a characteristic of which economic system?
Traditional economy
A science that examines how goods
and services are produced, sold, and used
Economics
A car detailing business provides a service to its customers. The business uses specific tools, equipment, and cleaning supplies to perform the work. From an economic perspective, how would the tools, equipment, and supplies be classified?
Capital
Finance
Activities involving money
The types of utility are
Form utility
Place utility
Time utility
Information utility
Possession utility
both government and individuals make decisions about economic resources
Mixed economy
Anywhere buyers and sellers meet to buy
and sell goods and services
Market
Develops when demand is higher than the
available resources
Scarcity
Controlling and making decisions about a business
Management
The difference between the income earned and
expenses incurred by a business during a specific
period of time
profit
Found in communist or socialist societies
Command economy
Anything that can be bought or sold;
includes goods and services
Product
Imagine a new company that decides to create and sell handmade, locally sourced furniture. They want to operate in a way that provides a high standard of living for their employees. To do this, they pay their employees generous wages and invest in quality production methods. How do the company's decisions regarding wages and production influence the overall market and economy?
The company's choices contribute to an improved standard of living, and their profits contribute to the local, state, and federal tax base.
A competitor just released a similar product that’s more eco-friendly and faster to make.
A physical item that can be touched
Good
Scarcity leads to three economic questions
– What should we produce?
– How should we produce it?
– For whom should we produce it?
Level of material comfort measured by the goods, services, and luxuries available.
Standard of Living
A business is considering producing a new product, but learns that the market for this product is oversaturated with competitors. Based on the principles of market forces, what is the most likely outcome if the business enters this market without a unique offering?
The business will be able to charge a high price due to high demand.
The business will have a surplus of its product, leading to low profits.
The business will experience a shortage, as consumers will want a new option.
The law of supply and demand will not apply to this new business.
The business will have a surplus of its product, leading to low profits.
Activities that identify, anticipate, and satisfy customer demand while making a profit
Marketing
A new bakery has just opened in a small town. The owner, an entrepreneur, decides to offer only one type of bread, believing it's a unique product that will sell well. However, after the first month, sales are lower than expected. Which of the following is the most likely reason for the low sales, based on the principles of a market economy?
The bakery is located in a traditional economy where this type of bread isn't part of the culture.
The bakery's owner isn't a true entrepreneur because they only sell one product.
The bakery has a surplus of a product for which there is low demand.
The bakery is experiencing a shortage because the owner didn't have enough capital.
The bakery has a surplus of a product for which there is low demand.
individuals are free to make their own economic decisions
Market economy