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the condition that results because people havelimitied resources byt unlimited wants.
factors of productions
the resources used to produce goods and service; defined as land,labor and capital.
a natural resours that is widely avaiable and in no danger of being used up; examples include sunlight and wind.
a nautral resource that cannot be replaced once it is used; expample includes oil and coal.
a naturaly resource that, with careful planning, can be replaced as it is used; examples include forest and fresh water.
the knowledge and skills people gain from education, on the job training, and other experiences.
the willingsness and ability to take the risks involved in starting and managing a buisness.
a measure of the efficiency with which goods and services are produced, stated as a ration of output per unit of input. determined by diciding total output by one of the three inputs involved in its production:land labor or capital.
the exchange of one benefit or advantage for another that is though to be better.
the value of the next best alternative that is given up when making a choice; a measure of what you must give up to get what you want.
production possibilities frontier:
a simple model of an economy that shows all the combinations of two goods that can be produced with the resources and technolody currently available.
the pleasure, satishfaction, or benefit a person recieves from consuming a product or service or from taking an action.
law of diminishing utility:
the general observation that as the quantity of a good or service consumed increases, the benefits for the consumer of each additional unit decrease.
3 economic goals:
what goods and services are to be produced
how are goods and services to be produced
for whom are goods and services to be produced.
6 economic goals:
- economic freedom: the stability to make our own economic decisions without interference from the government
- economic equity:involves the fair and just distribution of a societys wealth
- economic growth: improving standard living
- economic stability:the goods and services we count on
- economic security:seeks to provide its less fortunate members with the support the need in terms of food shelter and health care to live decently.
- economic efficiency: making the most of the economies resources.
the result of using resources in a way that produces the maximum amount of goods and services.
invisible hand and lassez-faire
ih:adam smiths metaphor to explain how an individuals pursuit of economic self interest can promote the well being of society as a whole.
Lf: the principle that government should not interfere with the workings of the economy; a french term meaning"let them do"
circular flow model in a mixed economy
- a.income earned when an individual sells or rents a factor of production that he or she owns; for example wages are a factor payment made to workers in exchange for their labor. (wages,rents, interest, dividends)
- b.government payment to a household or firm for which the payer recieves no good or service in return; examples social security checks and unemployment benefits
an economic system in which decisions about production and consumption are made by a powerful ruler or government
an economic system in which decisions about production and consumtion are based on custom and tradition.
an economic system in which economic decisions are left up to individual producers and consumers.
an economic system in which both the government and individuals play important roles in production and consumption; most modern economies are mixed economies
free enterprise systerm
an economic systerm in which the means of production are mostly privately owned and operated for a profit
the development of skills or knowledge in one aspect of a job or field of interest.
divisions of labor
the allocations of serparte tasks to different people, based on the principle of specialization
the act of willingly trading one iteam or service for another
article 1 section 8 of the U.S. constitution which gives congress the power to regulate interstate trade.
the condition that exists when someone can produce a good service at a lower opportunity cost then someone else.
the condition that exists when someone can produce a good or service using fewer resources than someone else.
the characteristic of a society in which people rely on others for most of the goods and services they want.