Vocabulary
What is the inability to satisfy all wants at the same time. All resources and goods are limited. This requires that choices be made.
Scarcity
Economic decisions are based on custom and historical precedent
Traditional economy
in the circular flow model Resources, goods and services, and money flow
continuously
What are things that incite or motivate
Incentives
A form of business organization with one owner who takes all the risks and all the profits
Proprietorship
What are factors of production that are used in the production of goods and services. (natural, human, capital, and entrepreneurship)
Resources
Individual choice
Minimal government involvement in the economy
Free Market
In the Circular Flow Diagram, this is where human resources flow to.
Businesses
What is the combining of human, natural, capital, and entrepreneurship resources to make goods or provide services.
Production
A form of business organization with two or more owners who share the risks and the profits
Partnership
What is selection of an item or action from a set of possible alternatives
Choice
Central ownership (usually by government) of property/resources
Centrally-planned economy
Lack of consumer choice
Command Economy
consists of earnings after all expenses have been paid
Profit
Supply & Demand
A form of business organization that is authorized by law to act as a legal entity regardless of the number of owners.
Corporation:
What is given up when a choice is made—i.e., the highest valued alternative is forgone.
Opportunity cost
In the circular flow model governments use tax revenue from households and businesses to provide
public goods and services.
Rivalry between producers and/or between sellers of a good or service usually results in better quality goods and services at lower prices.
Competition
What is the using of goods and services.
Consumption
A person who takes a risk to produce and sell goods and services in search of profit
Entrepreneur
what is the amount of money exchanged for a good or service.
Price
What are the three basic questions of economics?
What will be produced?
Who will produce it?
For whom will it be produced?
Consumers determine through purchases what goods and services will be produced.
Consumer sovereignty
What economic system does most economies today have?
Mixed Economy
circular flow diagram is a way of visualizing and categorizing activity within an
economy