Economics Flashcards Section 1.1

Questions and Answers

What is scarcity?

The conflict between unlimited wants and limited resources.

What is a market economy?

Business and individuals are free to make their own decisions as they buy and sell in their own marketplace.

What is capitalism?

Economic resources are privately owned by individuals rather than the government.

What is free enterprise?

Individual owners of businesses are free to decide what they will produce. Signup and view all the answers

What is a marketplace?

Where sellers and buyers do business. Signup and view all the answers

What is private enterprise?

An individual's right to own a business, select a market to enter, and produce with limited government direction. Signup and view all the answers

What is private property?

You can own, use, and dispose of things of value. Signup and view all the answers

What is profit?

The amount of money left over when subtracting the expenses of operating a business from its income. Signup and view all the answers

What is profit motive?

The desire to work hard, to be creative, and to satisfy customers in order to earn a profit. Signup and view all the answers

What is competition in business?

The rivalry among businesses to sell their products and services to consumers. Signup and view all the answers

What are the major differences between a command economy and a market economy?

In a command economy, the government controls what is produced and how it will be shared; in a market economy, people have more freedom and can make their own decisions. Signup and view all the answers

What is the most important characteristic of a market economy?

The freedom to make your own decisions, such as what you want to produce. Signup and view all the answers

What countries have adopted market economies?

Many countries throughout the world that had formerly command economies. Signup and view all the answers

What changes would a citizen find when transitioning from a traditional to a market economy?

Production would move faster and become easier; more variety of options to buy and sell would be available. Signup and view all the answers

Study Notes

Economic Concepts

Scarcity: Represents the tension between endless human wants and finite resources available.
Market Economy: Characterized by freedom for businesses and individuals to make their buying and selling decisions independently within a marketplace.
Capitalism: Economic system where resources are owned privately rather than by the government, promoting individual ownership.
Free Enterprise: Individual business owners possess the autonomy to determine production decisions without government interference.
Marketplace: Physical or digital spaces where buyers and sellers engage in commerce.

Property and Profit

Private Enterprise: Right of individuals to own businesses and select markets with minimal governmental involvement.
Private Property: Legal right to own, utilize, and transfer items of value.
Profit: Financial gain calculated by subtracting business expenses from income, rewarding risk-taking.
Profit Motive: Drives individuals to innovate and satisfy consumer needs to achieve financial success.

Competition

Competition: The struggle among businesses to attract consumers by selling products and services.

Economic Systems

Command vs. Market Economy: Key difference lies in control; government-manages production in command economies, while market economies favor individual freedoms in production choices.
Importance of Market Freedom: Essential trait of a market economy; it allows business owners to operate freely, influencing product availability and quality.

Global Context

Transition to Market Economies: Many countries that previously had command economies have shifted to market economies to enhance freedom and production capabilities.

Personal Impact of Economic Transition

Changes from Traditional to Market Economy: Citizens would likely experience faster economic transactions, easier production with modern tools, and a greater variety of buying options.

Description

Explore fundamental concepts of economics with these flashcards from Section 1.1. Key terms like scarcity, market economy, capitalism, and free enterprise are covered to enhance your understanding of economic principles. Perfect for students and anyone interested in economics.