Introduction to Free Enterprise ~ Slay
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36 terms
Terms | Definitions |
|---|---|
 Free enterprise- | study of economics. |
| Economics- | the study of how we fulfill unlimited wants with limited resources. |
| What is the US limited resource? | money. |
| 2 types of economics: | 1. Macro 2. Micro |
| Macro- | big, national debt. |
| Micro- | personal budget. |
| Scarcity- | not having enough of something. |
| Opportunity cost- | cost of one item in terms of another. |
| Trade off- | buying something less expensive that still fits your needs. |
| What is a way of life for most people? | trade off. |
| Factors of production- | things that you use to make things. |
| 4 factors of production: | 1. human resources 2. capital 3. natural resources 4. entrepreneur |
| Human resources- | people. |
| Capital- | money. |
| Natural resources- | anything that goes into your product, land, building. |
| Entrepreneur- | person who puts all factors together and starts business. |
| Human resource payment- | wages. |
| Capital payment- | interest. |
| Natural resource payment- | rent. |
| Entrepreneur- | profit. |
| Economic questions- | important and however you answer is how your economy works. |
| 4 basic economic questions: | 1. What will I make? 2. How will I make it? 3. Who get to buy it? 4. How are you going to distribute? |
| Who decides what you will make? | consumer. |
| Who decides how you will make it? | business owner and government. |
| Who decides who gets to buy it? | price tag. |
| Who decides how you are going to distribute? | business owner. |
| Profit margin- | how much business owner makes off each product. |
| Lexus profit margin: | produce very little with high profit margin. |
| Wal-mart profit margin: | make little on high profit, produce billions. |
| Whoever answers ________ ________, determines _________ _________. | economic questions, economic system. |
| 4 economic systems: | 1. traditional 2. command 3. free economy 4. mixed |
| Traditional economical system- | do things the way they were always done. |
| Command economical system- | government answers questions. |
| Free economy economical system- | consumer answers every question. |
| Mixed economical system- | command and free economy joined. |
| You have different ______ of every economic system. | levels |
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