Flashcards › Economics Chapter 1: Economic Fundaments

What is the difference between a "want" and a "need" Wants are desired and not needed to survive; needs are economic necessities to survive in society What is economics? The study of the art and science of how decisions aremade regarding limited resources What are the two major divisions of economics? Microeconomics and Macroeconomics Give an example of microeconomics. Going to the store and choosing a grocery product based on price, budget, needs and wants. Give an example of macroeconomics. The federal government allocating money for social welfare; A large corporation making a land purchase; A large retail chain deciding what products to put on their shelves. What is one of the fundamental issues regarding natural resources? Utilization; how to use these resources in the best possible way What does "scarcity" mean? The lack of income, and the inability to get enough income, to satisfy all wants or desires. Give an example of an economic choice based on scarcity. Choosing to save or spend income; choosing how to spend your income; choosing how to spend your time What is the difference between a "shortage" and scarcity? Shortages are short term supply problems; scarcitty refers to permanent decreased income and/or resources What are the three historical measures of wealth? Land, Gold & Silver (Mercantilism) What are the four factors of production? Land, Labor, Capital, Entrepreneurship What is another name for land? Real property; real estate Why is land necessary for production? The ability to use the land for producing products, including crops, manufactured goods, technology services, etc. What are the two definitions of labor? The work people do; OR the work force that is avasilable to do the work What are "goods"? ny tangible items, such as a toaster, a car, a blanket, etc. What is a commodity? A large quantity of goods that are sold, exchanged and traded, such as pork bellies, wheat, steel, gold, rice, etc. What are "services"? Activities done for others in exchange for a fee or other renumeration What is capital? The resources and wealth used to make more resources, wealth, commodities and services If a resource, such as money, is not used, can it be called capital? No, the resources must be put to use to make more to be capital What are "capital goods"? Goods used to produce saleable goods What does capital increase? Productivity Starting a new business, or adding to an existing business, is called _____? Entrepreneurship Who is considered the "father of modern capitalism"? Adam Smith from the 1700s What is technology? An added measure of production; technology affects transportation, communication, production, What did Adam Smith say was the best way for society to prosper? Let each individual pursue their own self-interests in business and daily living Identify 10 natural resources found in the United States oil, naqtural gas, trees, water, bauxite (aluminum ore), iron ore, copper ore, fish, uranium, wind Introduction to HS Economics