Economics Quiz - Economics Systems

specialization

a method of production in which a workers or firm focuses on the production of one aspect of a good/service to gain a greater degree of efficiency

Adam Smith: 1723-1790 + political economics

if relationship continues with limited government interference, then a higher standard of living will be achieved

microeconomics

focuses on factors that affect decisions of individuals and firms + considers consumer behavior, employment, supply & demand of specific goods/services

macroeconomics

focuses on the movement and trends of the economy as a whole + considers interest rates, production, inflation, Gross Domestic Product (GDP)

household sectors

• own the factors of production (FOP) including land, labor, and capital

• are CONSUMERS of goods & services

firms

• provide households with finished products & earn revenue from sales

• are PRODUCERS of goods by taking inputs (FOP) and turning them into outputs (goods/services

• paying wages, rent, etc.

revenue

total sales of consumer purchases-colts of production

product markets

the exchange of finished products of goods and services for money

factors of production

land, labor, capital, and entrepreneurship

natural resource markets

the exchange of resource in order to produce finished products

capital resource markets

financial markets where businesses can raise funds through the issuance of stocks, bonds, and other financial instruments to invest in long-term assets.

human resource markets

in the product market: monetary exchange from households and a psychical exchange from firm

pure market economy

all resources are privately owned, and production is coordinated by individuals + privately owned firms

transitional economy

economics in the process of shifting from a command to a market economy

pure command economy

all resources are government owned (often associated with communism)