chapter 3

• natural resources

• labor

• capital

• entrepreneurship

list the 4 factors of production.

information

sometimes listed as a 5th factor of production

traditional

the economy and its rules are based on custom, heredity, and caste

command economy

the centralized authority (government) operates and regulates the economy

• planned

• directed

fill in the blank

command economy is also called ________ or _________

free enterprise

the people of the nation are free to make their own economic decisions

capitalism

fill in the blank

free enterprise is also called ________

mixed economy

a combination of capitalism and heavier government regulation

america

fill in the blank

________ is an example of a mixed economy

full employment

anyone who wants to work has a job (3-4% of the work force is unemployed)

economic security

fill in the blank

one of the government’s main responsibilities is ________ _______ for the life and property of its citizens

conservatives

economic growth over equity

liberals

equity over growth

• land

• raw materials

fill in the blank

the factor of natural resources includes ______ and other ____ _________

land

usually most expensive; price will vary depending on location (city, country, farmland, etc.)

• scarcity

• productivity

fill in the blank

with land, value is determined by _______ and _________

raw material

fill in the blank

land is also considered a ___ ________ because human resources can be applied to it for capital gain

minerals

precious metals with intrinsic value; some have technological or architectural value

intrinsic

fill in the blank

minerals are precious metals with _______ value; some have technological or architectural value

water

a raw material used in manufacturing goods

• animals

• plants

fill in the blank

________ and _______ produce useful meat and animal by-products as well as vegetal resources

renewable energy resources

replenish themselves in a short period of time; biomass, hydro-power , geothermal, wind, the sun, etc.

nonrenewable energy resources

cannot be replaced or take a long time to be regenerated; coal, petroleum, natural gas, nuclear power

labor

any work that contributes to the production of goods and services

cost of labor

most of the price we pay for good pays for the labor used to make it

labor

fill in the blank

with the cost of labor, _____ is usually the most expensive factor

prosperity

fill in the blank

labor results in _________ for a nation

free labor

free people will work harder and more efficiently than people who aren’t free

financial rewards

fill in the blank

in a free society, labor will result in _________ ________ for the individual

productivity

measure of how efficiently resources are employed

capital

tangible producer goods

sometimes

fill in the blank

money can _________ be capital because it is used to buy capital goods

subsistence economy

an economic system that provides barely enough to keep a society alive; in this system, capital goods are not used efficiently

not used efficiently

fill in the blank

in a subsistence economy, capital goods are ____ ______ ________

private capitalism

a system in which the majority of a nation’s capital is owned and controlled by private individuals and businesses; capital is used effectively in this

is used efficiently

fill in the blank

in a private capitalism, capital ___ ______ _______

capitalist

someone who owns or uses capital goods to produce other goods

robinson crusoe

capitalist who used tools and equipment from the shipwrecked boat

economy

fill in the blank

capital goods help more value to Crusoe in his condition; money was worthless to him without an _______ to use it

entrepreneurship

the intelligent supervision of the other factors of production (AKA management)

entrepreneur

someone who starts a business undertaking, risking his own time, money, etc.

e. i. du pont

one of the first American businessmen to profit from selling gunpowder

gunpowder

fill in the blank

in the early 1800s, the DuPont Co. was hired to provide _________ for the American government

chemical

fill in the blank

today, the DuPont Co. is a large ________ production company

production

fill in the blank

the entrepreneur joins together _________ factors and makes possible large-scale production and distribution

property

fill in the blank

the right of an individual to own ________ is the cornerstone of capitalism

real property

tangible items

financial property

money and investments

intellectual property

creative labor (music, patents, etc.)

enterprise

the freedom to use your own finances

competition

rivalry between similar businesses; results in lower prices for consumers

limited government

little to no government restriction on property, businesses, investments, etc.

circular flow model

the flow of the economic choices that are made by private households and private businesses

• private households

• private businesses

fill in the blank

the circular flow model is the flow of the economic choices that are made by _______ _________ and ________ ___________