economis studuidy guide

Four Factors of Production

Land, Labor, Capital, and Entrepreneurship used to produce goods and services.

Land

Natural resources like water, oil, and trees used in production.

Labor

Human work, such as teachers and factory workers.

Capital

Tools and machines, for example, hammer and computer, used in production.

Entrepreneurship

Individuals like Elon Musk who start businesses.

Goods

Physical items that people can buy, such as phones and sandwiches.

Services

Actions done for others, like haircuts and teaching.

Scarcity

Limited resources requiring choices about what to produce, buy, or save.

Microeconomics

The study of small units like individuals or businesses.

Macroeconomics

The study of entire economies and global trends.

GDP (Gross Domestic Product)

The total value of all goods and services a country produces in a year.

Entrepreneurs in Capitalism

Individuals who start businesses and take risks for profit.

Capitalist Economy Characteristics

Private property rights, economic freedom, profit motive, competition.

Importance of Competition

Lowers prices and improves quality in the market.

Profit Motive

The incentive for individuals to work hard and take risks to earn money.

Adam Smith

Scottish economist who supported capitalism and wrote The Wealth of Nations.

Laissez-Faire Economics

The idea that government should not interfere in the economy.

Market Economy

An economy where people decide what to produce, buy, and sell.

Command Economy

An economy where the government makes all economic decisions.

Proletariat

The working class in a capitalist society.

Bourgeoisie

The wealthy class who own businesses and capital.

Socialist Economy

An economy where the government owns key industries and promotes equality.

Communism

A system where the government owns all property and makes economic decisions.

Mixed Economy

An economy that combines elements of capitalism and government control, like the U.S. or Canada.

GDP per capita

The average contribution to GDP per person in a country.

Standard of Living

The level of wealth and comfort available to a population.

Consumer Sovereignty

The idea that consumers control what is produced by their purchasing choices.

Voluntary Exchange

The process where people trade goods and services freely.

Opportunity Cost

What you give up when choosing one option over another.

Scarcity

A situation where resources are limited compared to desires.