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Market Economy
Relies on voluntary trade. Also known as "free enterprise"
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Market
An arrangement that allows buyers and sellers to make exchanges
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Profit
The incentive to have a buisness
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What are 5 concepts in the Economic Way of Thinking?
- 1) Scarcity forces people to make choices
- 2) All choices involve alternatives
- 3) People try to make choices that get them greater benefits than costs
- 4) People respond to incentives
- 5) People gain when they trade voluntarily
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What are the 3 basic economic decisions in a market economy?
- 1) What goods and services should be produced
- 2) How should goods and services be produced
- 3) For whom will goods and services be produced
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Macroeconomics
The study of the economy as a whole (examples: US, Concord, NH)
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Microeconomics
The study of individual consumers and buisnesses
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Cost-Benefit Principal
How we make decisions comparing the possible benefits of a choice to what it will cost us
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Economics
A social science
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Entrepreneur
Someone who takes buisness risks in hopes of earning a profit
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Goods
Items of value that can be seen or touched
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Opportunity Cost
The highest valued alternative one gives up when making a choice
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Scarcity
The inability to satisfy everybody's wants
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Services
Items of value that cannot be seen or touched
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Capital resources
Machinery and tools
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Knowledge about the production and distribution of most products is...
spread amoung many people who may not even know each other.
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In a market economy, what organizes and coordinates the production of goods and services?
exchange or scarcity
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What does a production possibilities graph show?
alternative ways an individual, a buisness or even a nation can use its resources.
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What is a trade-off?
The choice given up
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What are the labels to these blanks? What is this equation called?
_________ + __________ +____________ = _____________
natural resource + human resource + capital resource = finished product
This is called a resource equation.
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Create a resource equation where the finished product is a book.
tree+author+computer/printer= book
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What is the fourth factor of production?
Entrepreneurship, which is the imagination, innovative thinking and management skills it takes to start a buisness
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The economic term scarcity is most often used to refer to...
The condition of limited resources and unlimited wants
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Production
A process that combines economic resources for a result of a good or service
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Distribution
The process of getting a product or service to consumers before the human want is satisfied
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Consumption
Using a product or service completes the want-satisfaction chain
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Factors of Production
Land, labor and capital resources
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What type of good is not a subject of economics?
anything that is free
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true or false? a bus station is an example of a capitol resource.
true
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true or false? a resource or a product is scarce if it is not freely available (price=$0)
true
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true or false? people make decisions based upon the extended opportunity cost of a choice.
true
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true or false? a good is free if it involves no apparent cost to you
false
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Celine buys a car for $17,000.
Five years later, Celine sells that car for $10,000. When Celine sold the car, it was worth __________________ to the buyer.
at least $10,000
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