Understanding Economics: Scarcity, Capitalism, and Mercantilism

These flashcards cover key terms and concepts from the lecture on economics, focusing on scarcity, capitalism, and mercantilism to aid in understanding essential economic principles.

Scarcity

The limited availability of resources in comparison to the unlimited wants of people.

Capitalism

An economic system where private individuals own and control the means of production and distribution.

Mercantilism

An economic system where the government controls trade and seeks to increase national wealth through a positive balance of trade.

Means of Production

The facilities and resources for producing goods and services.

Economic System

The structure by which a society allocates resources and distributes goods and services.

Inflation

The rate at which the general level of prices for goods and services rises, eroding purchasing power.

Pine Straw Example

Used to illustrate how abundance affects price; pine straw is cheap because it's abundant, while diamonds are expensive due to their scarcity.

Private Investors

Individuals who provide capital to a business in exchange for a share of ownership and profit.

Capital

Money or assets used to invest in a business or the means of production.

Profit

The financial gain made in a transaction, after subtracting expenses.

Absolute Monarchy

A form of government where the monarch has absolute power over the state and government.

Consumer

An individual who purchases goods and services for personal use.