Definitions
Equilibrium
Supply and demand are equal
Natural resources
Raw materials from nature used to produce goods
Surplus
Supply is greater than demand
Goods/Services
Goods: Can be physically weighed and measured (tangible)
Services: Tasks that people or machines can perform
Traditional
Tradition and custom govern decisions found in rural, undeveloped countries
Scarcity
Limited resources and unlimited wants and needs
Human resources
the knowledge, efforts, and skills people provide
Shortage
Demand is greater than supply
Mutual relationship
You depend on the business and they depend on you
Market
A system in which economic decisions are made in the marketplace according to the laws of supply and demand
What you give up when you make a choice to buy something else.
Capital resources
The resources used to produce goods and services
Where does the equilibrium occur?
Where the demand and supply curves intersect
What is the economic problem?
Scarcity
Command
System in which a central authority such as the state makes the key economic decisions
Business
Entrepreneurial resources
The initiative to produce goods and services or create new ones
Law of Demand
Inverse relationship: if price is up, the quantity is down. If price is down, the quantity is up.
Wage earner/Consumer
Wage earner: in order to make products and services, businesses need to hire workers
Consumer: a person who selects, purchases, uses, or disposes of goods and services
Mixed
Combination of a market and command economy
Public/private wants
Private: what individuals desire
Public: widely shared by many people (society), such as highways, public libraries, shopping centers, and parks
Definition of factors of production
Things such as buildings, materials, and equipment used to produce goods and services
Direct relationship: If the price is up, the supply is up. If the price is down, the supply is down
What do businesses provide?
Necessities, luxuries, and the opportunity to make money
What is taken care of in a mixed economy?
The state takes care of peoples needs while the market takes care of peoples wants