Glencoe Economics Principles Overview

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Questions and Answers

What is scarcity?

The condition of not having enough resources to produce all the things people would like to have.

What are the factors to prevent scarcity?

What to produce

How to produce

For whom to produce

All of the above (correct)

What is the difference between wants and needs?

A need is a basic requirement, while a want is something not necessary for survival.

TINSTAAFL stands for 'There Is No Such Thing As A Free Lunch'.

True Signup and view all the answers

What are the factors of production?

Land, capital, labor, and entrepreneurs. Signup and view all the answers

What are capital goods?

Tools, equipment, machinery, and factories used in the production of goods and services. Signup and view all the answers

Define labor in economic terms.

The people needed to commit their efforts and abilities. Signup and view all the answers

Who is an entrepreneur?

An individual that offers a big change in the economy due to producing new businesses. Signup and view all the answers

What does Gross Domestic Product (GDP) measure?

The dollar value of all final goods, services, and structures produced within a country's borders in a 12-month period. Signup and view all the answers

What are consumer goods?

Goods intended for final use by individuals. Signup and view all the answers

What is a durable good?

Goods that last 2-3 years. Signup and view all the answers

What is a nondurable good?

A good that lasts less than 2 years. Signup and view all the answers

Define services in economic terms.

Work that is performed for someone, such as haircuts and home repairs. Signup and view all the answers

Who are consumers?

Customers; people that buy things. Signup and view all the answers

What does value refer to in economics?

The worth of the product. Signup and view all the answers

Explain the paradox of value.

Some necessities like water have a very low monetary value, while some nonnecessities like diamonds have a very high value. Signup and view all the answers

What is utility?

The capacity to be useful and provide satisfaction. Signup and view all the answers

Define wealth in economic terms.

The accumulation of products that are tangible, scarce, useful, and transferable. Signup and view all the answers

What is a market?

A location or mechanism that allows buyers and sellers to exchange a specific product. Signup and view all the answers

What are factor markets?

Markets where the factors of production are bought and sold. Signup and view all the answers

What are product markets?

Markets where producers sell their goods and services. Signup and view all the answers

What is economic growth?

When the total output of goods and services increases over time. Signup and view all the answers

What does productivity measure?

The amount of goods and services produced. Signup and view all the answers

Define human capital.

The sum of people's skills, abilities, health, knowledge, and motivation. Signup and view all the answers

What is the division of labor?

A way of organizing work so that each individual worker completes a separate part of the work. Signup and view all the answers

What does specialization mean in economics?

When factors of production perform only tasks they can do better or more efficiently than others. Signup and view all the answers

What is economic interdependence?

The reliance upon others, and others relying on us, to provide the most goods and services we consume. Signup and view all the answers

What are trade-offs?

Alternative choices. Signup and view all the answers

Define opportunity cost.

The cost of the next-best alternative. Signup and view all the answers

What is a production possibilities frontier?

A diagram representing various combinations of goods and services an economy can produce when all its resources are in use. Signup and view all the answers

What is an economic model?

A simplified equation, graph, or figure showing how something works. Signup and view all the answers

What is cost-benefit analysis?

A way of comparing the costs of an action to the benefits received. Signup and view all the answers

Define a free enterprise economy.

An economy where consumers and privately owned businesses, rather than the government, make the majority of 'what', 'how', and 'for whom' decisions. Signup and view all the answers

What is the standard of living?

The quality of life based on the ownership of necessities and luxuries that make life easier. Signup and view all the answers

What is an economic system?

An organized way of providing for the wants and needs of people. Signup and view all the answers

What is a traditional economy?

The use of scarce resources in a system that is based on customs and traditions. Signup and view all the answers

What characterizes a command economy?

A central authority making the major decisions about 'what', 'how', and 'for whom'. Signup and view all the answers

What is a market economy?

An economic system where decisions are made based on supply and demand. Signup and view all the answers

Study Notes

Fundamental Economic Concepts

Scarcity refers to the limited resources available to meet all human wants.
Key factors in addressing scarcity include determining WHAT to produce, HOW to produce, and FOR WHOM to produce.
Needs are essential for survival, while wants are non-essential desires.

Economic Principles

TINSTAAFL: emphasizes that everything has a cost; nothing is free.
Factors of production include land, capital, labor, and entrepreneurship, all vital for creating goods and services.

Goods and Services

Capital goods are the machinery, tools, and buildings used in production.
Labor is the human effort applied in the production of goods and services.
Entrepreneurs are individuals who initiate new businesses and drive economic change.

Measuring Economic Performance

Gross Domestic Product (GDP) measures the total dollar value of all final goods and services produced within a nation over one year.
Goods are tangible items that serve a purpose, while consumer goods are intended for final individual use.
Durable goods last for 2-3 years, whereas nondurable goods last less than 2 years.
Services encompass activities performed for others, like repairs and personal grooming.

Economic Value and Wealth

Consumers are individuals who purchase goods and services.
Value is the worth of a product based on its usefulness.
The paradox of value illustrates the discrepancy between the low value of essentials (like water) and the high value of nonessentials (like diamonds).
Utility is a measure of the usefulness of a product in providing satisfaction.
Wealth is defined as the accumulation of valuable and transferable goods.

Market Dynamics

A market is any mechanism that enables buyers and sellers to exchange products.
Factor markets involve the buying and selling of production inputs.
Product markets are where final goods and services are sold to consumers.

Economic Growth and Efficiency

Economic growth occurs when the output of goods and services increases over time.
Productivity measures the efficiency of production, indicating how much is produced.
Human capital comprises the skills, knowledge, and health of individuals contributing to labor.

Organizational Structures

Division of labor organizes work by assigning specific tasks to individual workers.
Specialization occurs when workers focus on tasks where they hold a comparative advantage.

Interdependence and Decision-Making

Economic interdependence describes the mutual reliance among people for the production and consumption of goods.
Trade-offs represent the alternatives sacrificed when making a choice.
Opportunity cost reflects the value of the next best alternative forfeited.

Economic Models and Assessments

Production possibilities frontier illustrates the maximum combinations of goods and services an economy can produce using all resources efficiently.
Economic models are analytical tools like graphs and equations demonstrating how aspects of the economy function.
Cost-benefit analysis is a method of comparing the costs associated with an action to the anticipated benefits.

Economic Systems

A free enterprise system is characterized by private sector decision-making regarding production and distribution, free from extensive government intervention.
The standard of living measures quality of life based on access to necessities and luxuries.
An economic system is an organized approach to meeting the population's wants and needs.
Traditional economies rely on established customs and practices for resource allocation.
Command economies depend on centralized authority for decision-making about production and distribution.

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Description

Explore key concepts from Glencoe's Economics Principles and Practices. This quiz covers essential topics such as scarcity, factors preventing scarcity, and the distinction between wants and needs. Test your understanding of economic basics in this informative quiz.