people evaluate both the benefits and the costs of their choices. because of scarcity, every decision to acquire a good or service or to spend time or money in a certain way has a cost attached to it.
there is not enough, nor will there ever be enough, goods or services to satisfy all the wants and needs of all individuals, families, and socieities.
justice or fairness
income for labor
income from land resources
income to the entrepreneur
take action or doing something about it, usually a result of a decision of a policy maker.
various combinations of goods that an economy can produce with full employment and fixed resources and technology
machinery/equipment to produce
food and household furniture that are produced for final buyers.
basic economic decisions
what to produce
how to produce it
who gets the goods
decisions are made by individuals
rely on prices as teh way buyers and sellers communicate
pure market economy
basic decisions are made by individuals.
economic system where many factors of production are collectively owned and attempts are made to equalize the money between the people
decisions are made by planners and there are no private property rights. resources are owned by the people or the government.
laissez fair economy
no governmental interference
federal govertment had the right and responsibility to provide an environment of full employement, full production, and stable prices. congress could manipulate taxes and governmental spending and run deficit budgets in an effort to bring economy to where they wanted it.
relationship between amount of product a consumer will by and product's price.
quantity demand falls as price rises/quantity demand rises as price drops
law of demand
inverse relationship etween price and quantity
downward sloping line on graph
consumers demand more at lower prices
quantity demanded is less than supplied.
quantity demanded is greater than supply
lower price limit
upper price limit
change in quantity demand
a change in the price causes a change in the quantity purchased.
change in demand
change caused by non price factors.
the price that sellers set that buyers are comfortable with buying.
a strong response to a price change
types of unemployment
frictional -- people are voluntarily out of work
cyclical -- seasonal work
structural -- job is no longer there
occurs when those who want to be unemployed are and everyone else is working
worker who drops out of the labor force because they have not been successful at finding a job.
increases in seller's costs are passed on to buyers.