Essential Economics Concept
Unlimited Wants + Limited Resources = ?
Scarcity
What is supply and what is demand?
Supply: the amount a producer is willing to sell
Demand: the amount a consumer wants to buy
What is a traditional economy?
All your ancestors passed down the job through the generations. If your grandpa was a farmer, you would be a farmer. Most economies start off as this.
What is a mixed economy?
Individuals and businesses SHARE economic decisions with the government
Consumer sovereignty is...
The consumer gets to choose where to buy from, impacting the demand and the supply of a business.
A consumer is someone who _____ while a producer is a _____.
buys things, business
Inflation happens because of... (3 reasons)
1. Government prints more money
2. Demand goes up because people have more money to spend
3. Supply is not increasing at the same rate
What is a free market economy?
Resources are owned, and decisions are made by individuals and businesses (all private property)
Government has little role in economic decisions
Individuals and businesses motivated by earning profit
Prices and success determined by supply and demand. - Consumer Sovereignty
The goods and services in highest demand will succeed
Public sector and Private sector
What is the system called that answers these three questions:
WHAT will be produced?
HOW will it be produced?
WHO will it be produced for?
An economy
The opportunity cost when you choose to go see a movie instead of going to a football game?
You won't be able to see the game live and won't know the results before anyone else.
What is it called when supply and demand are equal? (this is seen on graphs)
Equilibrium point
What is a command economy?
Resources are owned and decisions are made by government (all public property)
Results in a lack of choice for the people
Centrally-planned = the government controls the production and consumption of goods and services. (What? How? Who?)
What are the characteristics of the US economy?
Limited government, Free Enterprise, Private property, Markets, Competition, Consumer Sovereignty
Where does a mixed economy sit in the scale between free market and command?
In the middle
What are the four factors of production?
Land, Labor, Capital, and Entrepreneurship
Law of Supply?
If the price is HIGH producers will want to sell MORE
If the price is LOW producers will want to sell LESS
List the world economies in order from least free to most free
Command, Traditional, Free Market
What are the impacts of globalization?
Job markets expand beyond national borders, More companies around the world = more competition, Some jobs move overseas, Some skills are in more demand
What is specialization?
People, businesses, regions, or nations focus on goods and services that they can produce better than anyone else
What are goods and what are services
Goods: physical objects that can be purchased
Services: work one person performs for another for payment
Law of Demand?
If the price is HIGH consumers will want to buy LESS
If the price is LOW consumers will want to buy MORE
The type of economy is determined by...
How much the government intervenes
What is globalization?
Individuals and nations working together around the world to buy and sell goods, and exchange cultures and technologies
What are imports and what are exports?
Imports: Bringing goods and services into a country from abroad to be sold.
Exports: Sending goods to another country to be sold.