economics

Three basic economic questions 

what, how, and for whom to produce

Fundamental problem of economics 

there are not enough resources to satisfy everyone’s wants and needs

Scarcity 

more wants than resources, therefore not enough resources for everyone

Factors of production

land, capital, labor, and entrepreneurs

Capital good 

tools used in productions of goods/services

Value 

worth in cents and dollars

Utility 

the capacity to be useful and provide satisfaction

Goods

a tangible item that is useful, scarce in some way, and can be transferred

Services

work/labor performed for someone

Specialization 

assigning tasks to those who can do them more efficiently

Production possibilities frontier 

diagram that represents the combinations of goods/services an economy can produce when resources are fully employed

Market Economy

people can make their own businesses

Traditional Economy

things are decided by tradition and custom

Command Economy

a central command owns the businesses

Major economic goals of the United States

Economic freedom, efficiency, equity, security, growth, and full employment and price stability

Features of Capitalism

Economic freedom, voluntary exchange, private property, profit motive, competition

government roles in the U.S. economy

protector, provider, regulator, consumer

modified free enterprise

people can freely have businesses but are subject to gov. intervention

sole proprietorship 

partnership

limited partnership

corporation

dividend

charter

bond

proxy

conglomerates

multinationals

professional association

common stock

preferred stock

horizontal merger

vertical merger

law of demand

marginal utility

diminishing marginal utility

demand curve

quantity demanded

subsitute

complement

total expenditure

unit elastic

elastic

inelastic