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Unit 1 - Vocabulary: Free Enterprise System and Scarcity

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5 Questions

What term refers to the condition when there are not enough resources available to produce everything that individuals demand?

Scarcity

Which of the following is NOT considered one of the factors of production in an economic system?

Money

What is the economic system characterized by private ownership of businesses operated for profit and economic freedom for both consumers and producers?

Free Enterprise System

Which term represents the value of goods and services that are given up in order to obtain an alternative good or service?

Opportunity Cost

What provides a visual representation showing the relationship between the factor market and the product market?

Circular Flow Model

Study Notes

Economic Systems

  • A free enterprise system is an economic system characterized by private ownership of businesses operated for profit, with economic freedom for both consumers and producers.

Scarcity

  • Scarcity is the condition in which there are not enough resources available to produce everything that individuals demand.

Opportunity Cost

  • Opportunity cost is the value of goods and services that are given up in order to obtain an alternative good or service.

Factors of Production

  • There are four factors of production: land, labor, capital, and entrepreneurship.
  • These resources are needed to produce goods and services.

Resources

  • Resources refer to supplies of something of value.

Economic System

  • An economic system is a process created to manage the production, consumption, and distribution of goods and services.

Circular Flow Model

  • The circular flow model is a visual representation showing the relationship between the factor market and the product market.

Test your knowledge of key terms related to economics including free enterprise system, scarcity, opportunity cost, and factors of production. Explore definitions and concepts related to economic systems and resource allocation.

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