Terms in this set (27)
System of producing, distributing, and consuming goods and services.
Factors of Production
The ingredients needed for production to occur. Ex: entrepreneurs, natural resources, capital and labor resources.
Agriculture, manufacturing, wholesale, retail, and service
Law of Supply and Demand
When supply is low and demand is high, the prices will be high. When supply is high and demand is low, the prices will be low.
What producers perform, like a hospital or airline
More control over the people by the state. The state establishes wages and compensations. Taxes are much higher to pay for the needs which the government meets freely for everyone (like healthcare).
The communal ownership of all property and a classless social structure. Economic production and distribution are directed and regulated by an authoritative economic plan (the government) that supposedly embodies the interests of the community as a whole. Government control, NO COMPETITION!
Free Enterprise (Market)
People decide what to produce and purchase. Innovation of products lead to competition. Private ownership of businesses. Ex: The United States.
Countries with low level of development is marked by few jobs in industry, poor services, low literacy rates, and a low life expectancy.
Countries with high levels of education, good healthcare, good services, advanced technology, and decent salaries.
How does a product go through the 5 types of industry?
1. Agriculture- natural resources are taken from the earth, then... 2. Manufacturing- a product is made using those natural resources, then... 3. Wholesale- the product is then sold, in large quantities, to a retailer. 4. Retail- the product is sold directly to a consumer. 5. Service- the product may be used in a restaurant, hospital, etc. Can also be a mall in which the consumer can buy directly from a retail and receive services.
People who have the ideas, the natural resources, capital resources, and labor resources to produce goods.
Raw materials used to make goods (land, water, forest, minerals, soil, climate)
Workers needed to create goods.
Money, buildings, machines, and supplies needed.
Factors which determine the current state of the economy in a country and for predicting future economic developments.
GDP Per Capita
It is a measure of the total value of Goods and Services sold in a country divided by its population.
The proportion of the population over age fifteen that can read and write.
The average period that a person may expect to live.
The death rate during the first year of life per birth.
An amount of something left over when requirements have been met; an excess of production or supply over demand.
Lack of resources or a very small supply.
What are the benefits of a free enterprise economy?
competition between businesses drives down prices
What is a basic problem that all economies must deal with?
What are economic barriers?
Scarcity of water resources, shortage of surplus capital, and heavy reliance
on traditional/agriculture methods of production
What happens when there is a shortage of entrepreneurs?
Fewer businesses are started
What is economic interdependence?
When countries depend on other countries to get what they need
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