Terms in this set (49)
Those things that a person thinks he or she must have in order to be satisfied
Means through which goods and swerves are produced
The private ownership of resources by individuals rather than by the government
Difference between the revenues earned by a business and the costs of operating the business
The process of choosing which needs and wants, among several, will be satisfied using the resources on hand
Economic Decision Making
Occurs when people's needs and wants are unlimited and the resources to produce the goods and services to meet those needs and wants are limited
Value of the next-best alternative
The quantity of a good or service a producer is willing to produce at different prices
The quantity of a good or service that consumers are willing to buy at a given price
Point at which supply and demand curves meet
Equilibrium Price and Quantity
Costs that must be paid regardless of how much of a good or service is produced.
Costs that go up and down depending on the quantity of the good or service produced
Measures the advantages of producing one additional unit of a good or service
Measures the disadvantages of producing one additional unit of a good or service
The cost advantages obtained due to expansion
Economies of Scale
examples physiological needs
food, sleep, water, shelter, air
Can any type of economy have enough resources to meet all the needs and wants of people
No because of Scarcity
Economies are based on what goods services will be produced, how they will be produced, and for whom they will be produced
Law of Diminishing Returns increasing 1 factor of production doesn't necessarily result in an continuing increase in output—it will eventually level off, then decline
How do entrepreneurs contribute toward the economy?
supply and demand, capital investment and job creation, change agents
What type of economy does entrepreneurship thrive in?
How do mixed economies usually form?
when a country shifts away from a command economy toward a market economy
What is the primary reason a business exists in a market economy?
to make a profit
production, marketing, management , and finance
4 functions of business
Know how price relates to demand
Demand rises as the price falls
examples of fixed and variable costs
Fixed - rent
variable - food ; entertainment
Which types of market structures are easy for a business to enter the market
Perfect Competition , monopolistic competition
examples of needs and wants
food, basic clothing, and a place to live = needs
CDs, computers, and jewelry = wants
Maslow's Hierarchy of Needs
5. Self-Actualization (realizing your potential)
4. Esteem (respect and recognition)
3. Social(friends, love, belonging)
2. Security ( physical safety and economic security)
1. Physiological ( sleep,food,water, shelter, and air)
Our needs and wants are unlimited
examples of capital resources
buildings, equipment, and supplies
In what type of economy do businesses and individuals decide what, how, and for whom to produce
how competition benefits consumers
competition forces a business to improve products, keep costs low, provide good customer service, and search for new ideas so that consumers will choose its products or services
Which business function is concerned with determining the amount of capital needed and how it will be obtained?
When would demand be most inelastic?
items consumers need—not want
What exists when there is one 1 provider of a good or service?
Know the difference between economic wants and noneconomic wants
Economic wants : involve a desire for material goods and services
Noneconomic wants : desire for nonmaterial things
occurs when individual workers focus on single tasks, enabling each worker to become more efficient and productive.
4 different types of economies
Command , Market traditional , and mixed
government determines what, how, and for whom products are being produced
individuals and businesses decide what, how, and for whom goods and services are produced
goods and services are produced the way they have always been produced
elements of the command and market economies are combined
What does the marketing mix consist of
product , price, distribution , and promotion
When a market is dominated by a small number of businesses that gain the majority of total sales revenue
difference between goods and services
Goods : products you can purchase ; can see and touch
Services : activities that are consumed as they are produced
Private property , freedom of choice , profit , and competition
4 principles the US economic system is based on
2 countries that use a mixed economy
soviet union and china
difference between a need and a want
Need : are things that you must have in order to survive
Want : things that you think you must have in order to be satisfied
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