33 terms

CE.11 Economic Principles & Systems

STUDY
PLAY
scarcity
the inability to satisfy all wants at the same time
Because all resources and goods are limited,
choices must be made
resources
factors of production used in the production of goods and services
4 kinds of resources
- human
- natural
- capital
- entrepreneurship
choice
selecting an item or action from a list of possible alternatives
opportunity cost
what is given up when a choice is made
highest valued foregone alternative
opportunity cost
price
the amount of money exchanged for a good or service
incentives
things used to incite or motivate
incentives are used to -
change economic behavior
interaction of supply and demand determines -
price
demand
the amount of a good or service that consumers are willing and able to buy at a certain price
supply
the amount of a good or service that producers are willing and able to sell at a certain price
production
the combining of resources to create goods and services
these determine what is produced
- consumer preference
- available resources
consumption
using goods and services
these determine what is purchased
- consumer preference
- price
the key factor in determining the type of economy a country has
the extent of government involvement
three basic economic questions
- What will be produced?
- Who will produce it?
- For whom will it be produced?
4 types of economy
- traditional
- mixed
- free market
- command
traditional economy
- based on custom and historical precedent
- people often perform the same work as previous generations
free market economy
- private ownership
- profit motive
- competition
- consumer sovereignty
- individual choice
- minimal government involvement
command economy
- central ownership
- centrally-planned
- lack of consumer choice
mixed economy
- individuals and businesses are decision makers for the private sector
- government is decision maker for the public sector
most economies today -
are mixed economies
U.S. economy
mixed economy
characteristics of the U.S. economy
- competition
- private property
- consumer sovereignty
- profit
- markets
markets
they are allowed to operate without undue interference from the government
private property
people can own property without undue interference from the government
profit
earnings after all expenses have been paid
competition
rivalry between producers and/or sellers
results of competition
better quality at lower prices
consumer sovereignty
consumers determine through purchases what will be produced

Flickr Creative Commons Images

Some images used in this set are licensed under the Creative Commons through Flickr.com.
Click to see the original works with their full license.