Economic Thinking, Structures & Economists

Economics

society's "organizers" who help individuals & leaders make informed choices

scarcity

the situation that exists when there are not enough resources to meet human wants.

factors of production

land, labor, capital, & entrepreneurship

trade-off

the alternative that you give up when you make an economic choice

production possibilities curve

a graph used to illustrate the impact of scarcity on an economy by showing the maximum number of goods or services that can be produced using limited resources

A PPC showing an increase in production would move the line to the:

microeconomics

the study of the behavior of individuals players in an economy, such as individuals, families, & businesses.

Adam Smith

Founder of modern economics, believed in self-interest, laissez-faire,

scarcity

the situation that exists when there are not enough resources to meet human wants.

command economy

the government decides what goods and services will be produced, how they will be produced and how they will be distributed.

market economy

based on individuals choice, not government directives.

traditional economy

an economic system in which families, clans, or tribes make economic decisions based on customs and beliefs that have been handed down from generation to generation.

central planners

members of the government who make all economic decisions

socialism

an economic system in which the government owns some or all of the factors of production, developed from the ideas of Karl Marx.

authoritarian system

North Korea

private property rights

the rights of individuals and groups to own property.

laissez-faire

a French phrase meaning "leave things alone", often paired with capitalism.

profit

a financial gain from business transaction.

competition

the effort of two or more people, acting independently, to get the business of others by offering the best deal.

Characteristics of Market economies

private property; specialization; voluntary exchange; profit; competition

circular flow model

a visual representation of government, consumer, business & household interactions.

mixed economy

a system with elements of traditional, command and market economies.

American free enterprise

a market economy based on individual choice, voluntary exchange and the private ownership of resources.

market failure

when people who are not part of a marketplace benefit from it or pay part of the costs.

opportunity cost

the value of the second best option

productivity

measuring output based on given input

entrepreneur

a product innovator, inventor and/or business owner

Karl Marx

a philosopher who believed government should intervene in society to create a more equal economy

This person is known to be "founder of the study of economics". He was British and wrote a book called "The Wealth of Nations" that studied how consumers & producers acted in their own self-interest to regulate society.

Adam Smith

The question, "what can you buy w/ $7? illustrates what economic concept?

Opportunity Cost

Even before a product is sold, it needs to be made. Economists call this production and categorize the materials needed to make it in 4 categories. What are the names of the factors of production?

land, labor, capital, and entrepreneurship

What do economist do?

study & organize society

What is the name of 1 entrepreneur we have studied?

Steve Jobs