Economics Factor Payments Flashcards

Questions and Answers

What is a factor payment?

An economic model based on customs and traditions

The income people receive in return for supplying factors of production (correct)

A government program to protect individuals

A market where buyers and sellers interact

What does patriotism refer to?

A sense of pride in one's country

What is a safety net?

Government programs that protect people experiencing unfavorable economic conditions

Define standard of living.

Level of economic prosperity Signup and view all the answers

What is a traditional economy?

An economy in which production is based on customs and traditions Signup and view all the answers

What defines a market economy?

Economic decisions are made by individuals or the open market Signup and view all the answers

What is a centrally planned economy?

An economy in which the government decides how economic resources will be allocated Signup and view all the answers

What characterizes a command economy?

An economy in which the government decides how economic resources will be allocated Signup and view all the answers

What is a mixed economy?

An economy in which private enterprise exists in combination with a considerable amount of government regulation and promotion Signup and view all the answers

Define market.

A group of buyers and sellers of a particular good or service Signup and view all the answers

What does specialization mean?

Training to do a particular kind of work Signup and view all the answers

What is a household in economic terms?

A person or group of people living in the same residence Signup and view all the answers

What does profit refer to?

The financial gain made in a transaction Signup and view all the answers

Define product market.

The market in which households purchase the goods and services that firms produce Signup and view all the answers

What does self-interest mean?

One's own personal gain Signup and view all the answers

What is an incentive?

A positive or negative environmental stimulus that motivates behavior Signup and view all the answers

Define competition in economic terms.

The struggle between organisms to survive in a habitat with limited resources Signup and view all the answers

What does the term 'invisible hand' refer to?

The self-regulating nature of the marketplace Signup and view all the answers

What is consumer sovereignty?

The power of consumers to decide what gets produced Signup and view all the answers

Define socialism.

A system in which the government owns and operates major businesses Signup and view all the answers

What is communism?

A theory or system of social organization based on the holding of all property in common Signup and view all the answers

What does authoritarian refer to?

A system of social organization where a central authority controls various aspects of life Signup and view all the answers

What is a collective?

A large farm leased from the state to groups of peasant farmers Signup and view all the answers

Define heavy industry.

Industry that requires a large capital investment and that produces items used in other industries Signup and view all the answers

What does efficiency mean in economics?

The percentage of the input work that is converted to output work Signup and view all the answers

What is the law of increasing costs?

The law that states that as we shift factors of production from making one good or service to another, the cost of producing the second item increases Signup and view all the answers

What is a trade-off?

An alternative that we sacrifice when we make a decision Signup and view all the answers

Define opportunity cost.

The most desirable alternative given up as the result of a decision Signup and view all the answers

What does thinking at the margin mean?

Deciding whether to do or use one additional unit of some resource Signup and view all the answers

Study Notes

Factor Payments

Factor payments refer to the income received by individuals or entities in exchange for providing factors of production, such as labor, land, and capital.

Patriotism

Patriotism embodies a strong sense of pride in one’s nation, fostering unity and loyalty among citizens.

Safety Net

Safety net programs are designed to assist individuals facing economic hardships, providing financial support during tough times.

Standard of Living

Standard of living indicates the level of economic prosperity experienced by individuals or groups, often measured by income, education, and access to resources.

Traditional Economy

In a traditional economy, production relies on established customs and practices, with roles typically passed down through generations.

Market Economy

Decisions in a market economy are predominantly made by individuals or through open market transactions, encouraging personal initiative and competition.

Centrally Planned Economy

A centrally planned economy is characterized by government control over the allocation of resources and production decisions.

Command Economy

Much like a centrally planned economy, a command economy also involves government directives in the management of economic resources.

Mixed Economy

A mixed economy combines elements of private enterprise with government intervention, aligning benefits from both systems for a balanced approach.

Market

A market represents a collective space where buyers and sellers engage in the exchange of goods and services.

Specialization

Specialization involves training or developing expertise in a specific area of work, enhancing efficiency and productivity.

Household

A household consists of individuals or groups residing together, influencing economic consumption and resource allocation.

Firm Factor Market

The firm factor market is the arena in which firms seek to purchase or hire factors of production, such as labor and capital.

Profit

Profit is defined as the financial gain resulting from a transaction, calculated by subtracting costs from revenues.

Product Market

The product market is the setting where households buy goods and services produced by firms.

Self-interest

Self-interest motivates individuals to act in ways that seek personal gain, influencing economic decisions.

Incentive

Incentives are stimuli that encourage certain behaviors—these can be positive (rewards) or negative (penalties).

Competition

Competition illustrates the struggle for resources among entities, fostering innovation and driving quality within a marketplace.

Invisible Hand

The invisible hand metaphor describes how self-regulating market forces guide resources towards their most efficient uses, driven by individual self-interests.

Consumer Sovereignty

Consumer sovereignty emphasizes the power held by consumers in determining product availability through their purchasing choices.

Socialism

Socialism involves governmental ownership and control over significant business sectors, aiming to distribute resources more equitably.

Communism

Communism describes a socio-economic system where property is collectively owned, eliminating individual ownership and prioritizing community welfare.

Authoritarian

Authoritarian systems centralize power, often limiting individual freedoms and promoting state control over social and economic structures.

Collective

A collective farm is a large agricultural unit operated by groups of farmers under lease from the government, aiming for efficiency through collaboration.

Heavy Industry

Heavy industry necessitates substantial capital investment and primarily produces goods utilized in other industries, such as machinery.

Underutilization

Underutilization occurs when resources are not fully exploited, leading to inefficiencies and lost potential output.

Efficiency

Efficiency is the measure of how effectively input resources are converted into productive output, often expressed as a percentage.

Law of Increasing Costs

This law states that reallocating resources from one good to another typically results in higher production costs for the second good due to differing factor inputs.

Trade-off

A trade-off represents the alternative sacrificed when a particular choice is made, highlighting opportunity costs in decision-making.

Opportunity Cost

Opportunity cost is the most valuable alternative forgone when making a decision, guiding economic choices and resource allocation.

Thinking at the Margin

Thinking at the margin refers to the process of evaluating the benefit or cost of producing or using one additional unit of a resource.

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Description

Test your knowledge on key economic concepts with these flashcards focusing on factor payments and related terms. Each card provides definitions to help you understand the principles of factor income, patriotism, safety nets, standard of living, and traditions. Perfect for students of economics or anyone looking to deepen their financial literacy.