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Because of scarcity, societies must put these before wants
What are needs?
the fundamental problem of economics - there is not enough resources for everyone's needs and wants
What is scarcity?
tangible products that people can buy such as a car, an apple, or a football
What are goods?
type of economy that is also called capitalism or free enterprise, where there is little govt. involvement and private citizens own the factors of production and use them for profit
What is a market economy?
Inverse relationship - as price goes up, demand goes down and as price goes down, demand goes up
What is the Law of Demand?
Study of decision making in a world with limited resources
What is economics?
The study of economics on a large scale - governments, societies, and the world
What is Macroeconomics?
people who buy goods & services
What is a consumer?
Combination of command and market economies where the citizens own businesses and capital, govt makes decisions like income tax and offers protections (type of economy of the United States)
What is a Mixed Economy?
decision making in small units - individuals, families, and businesses
What is microeconomics?
The Father of Modern Economics
Who is Adam Smith?
1. What to produce 2. How to Produce 3. For whom to produce
What are the three economic questions?
activities performed for people for a fee such as a carwash, haircut, sporting event
What are services?
Type of economy where the factors of production are publicly owned by the government which controls prices, production, and distribution of goods and services; sometimes controlled by authoritarian state (examples are socialism and communism)
What is a Command Economy?
amount producers will sell at a price
What is supply?
The Author of the Wealth of Nations
Who is Adam Smith?
people who create goods & services
What are producers?
a consumer’s willingness & ability to purchase a product
What is demand?
Where supply and demand meet, which is the best situation for consumers and producers because there is no shortage or supply.
What is equilibrium price?
Land/natural resources, labor, capital goods, entrepreneurship
What are the factors of production?
The place where individuals and households sell the four factors of production
What are Factor (resource) markets?
the option you did not choose (next best alternative)
What is Opportunity Cost?
Type of economy based on customs and traditions
What is a traditional economy?
There is more supply than demand (think of a car dealership that has to get rid of too much inventory)
What is a surplus?