Ch 3 Sec 1 and 2: Economics and Louisiana

economy

A system by which goods and services are produced and distributed

goods

Items purchased to satisfy needs and wants

services

Actions or activities that one person performs for another

consumer

A person who purchases goods and services for personal use

Producer

A person, company, or country that makes, grows, or supplies goods or commodities for sale

natural resource

Materials or substances such as minerals, forests, water, and fertile land that occur in nature and can be used for economic gain

human resource

a person and the skills and knowledge he or she brings to a job

capital resource

a tool, machine, or building that people use to produce goods and services

scarcity

Limited quantities of resources to meet unlimited wants

supply

The amount of goods available

demand

Consumer willingness and ability to buy products

profit

The financial gain made in a transaction

economist

a person who studies the economy

Traditional Economy

An economy in which production is based on customs and traditions and economic roles are typically passed down from one generation to the next.

command economy

An economic system in which the government controls a country's economy.

market economy

Economic decisions are made by individuals or the open market.

Mercantilism

An economic policy under which nations sought to increase their wealth and power by obtaining large amounts of gold and silver and by selling more goods than they bought

smuggling

The act of illegally importing or exporting goods

commerce

the buying and selling of goods and services

What are the two different levels of economies?

Macro and micro

Natural

resources found in nature

human

resources provided by people in the goal of providing a service

capital

any tool used to provide a resource or good/service

in economic choices, what are the two outcomes called?

Opportunity cost and opportunity benefit

What do the two outcomes of economic choices mean?

Opportunity cost is what you miss out on by choosing and can be good or bad, opportunity benefit is what you get by choosing

How do supply and demand curves shift when prices change?

They either shift left or right depending on if the price goes up or down

demand goes up, supply stays the same

prices goes up

demand goes down, supply stays the same

price goes down

demand stays the same, supply goes up

price goes down

demand stays the same, supply goes down

price goes up

What is a surplus and a shortage?

surplus → supply is greater than demand
shortage → demand is greater than supply

Be able to read an economic model and determine surplus vs shortage. How do you tell?

Read the model to determine where quantity is greater (supply or demand). If it is the top gap of the "X", then its a surplus, if it is the bottom gap of the "X", then it is a shortage

How do you calculate how much a surplus is using an economic model or table? (Hint: remember IXL)

Subtract the quantity demand from the quantity supply (supply is greater than demand)

How do you calculate how much a shortage is using an economic model or table? (Hint: remember IXL)

Subtract the quantity supply from the quantity demand (demand is greater than the supply)

What are the four basic economic questions?

What will be produced?
How will it be produced?
For whom will it be produced?
How much will it be produced?

What are the three types of economies and what are the difference between the 3?

~Traditional economy → based on religion, customs, and beliefs. Bartering occurs and based on agriculture
~Command economy → government answers basic economic questions for citizens
~Market economy → individual citizens answer the basic economic questions