What is scarcity?
Limited quantities of resources to meet unlimited wants and needs
List the factors of production.
Land, labor, capital
List the "3 basic questions" that all economies must answer.
What to produce?
How to produce?
For whom to produce?
What can technology do for production?
Technology can INCREASE production.
What is the standard of living measured by?
Gross Domestic Product (GDP)
What do consumers and producers do?
Producers produce goods and services;
Consumers purchase goods and services.
How do producers and consumers communicate?
Producers set prices according to demand. If demand for product is high, this tells producers that it is worth more money. However, this works for the consumer's favor as well; if the consumer doesn't find something is worth the high price, the lack of sales tells producers that the product/service is in less demand.
List the 4 sectors of GDP
What is the Consumption Sector (in GDP).
The purchase of a new good or service.
Ex. Buying candy from Albertsons
What is the Investment Sector (in GDP).
Purchases made by businesses.
Ex. Buying machines for production of clothes
What is the Government Sector (in GDP).
Purchases made by the government.
Ex. Buying weapons for the military
What is the Foreign Sector (in GDP).
All other purchases made outside of the United States.
Ex. American Chevys sold in South America.