Unit 1 Review PDF

exam review! scarcity: situation where there are not enough resources to meet human wants choice: people decide on desires, needs and wants. 1. 2. 3. 4. factors of production Land, all natural resources used to produce goods. Labor, human effort to produce goods and services. Capital, all of the re...

exam review! scarcity: situation where there are not enough resources to meet human wants choice: people decide on desires, needs and wants. 1. 2. 3. 4. factors of production Land, all natural resources used to produce goods. Labor, human effort to produce goods and services. Capital, all of the resources made and used by people to produce goods and services. Entrepreneurship involves the vision, skills, and risk-taking needed Goods, physical objects that can be purchased, such as food, clothing, and furniture. Services, work that one person performs for another for payment (work that one person does for another.) 1. Incentives are methods used to encourage people to take certain actions. 2. Cost-benefit analysis is an approach that weighs the benefits of an action against its costs. 3. Opportunity cost is the value of something that is given up to get something else that is wanted; 4. Trade off, the alternative you give up when you make an economic choice. 5. socialism, the government owns some of the factors of production, communism government owns all. adam smith, father of economics economic systems 1. command, The individual has little influence over how the economic questions are answered in a pure command system. 2. market, In this system the government does not get involved. Individuals own the factors of production 3. a pure traditional economy answers the basic economic questions according to tradition. 4. a mixed economic system contains elements of the market and command systems, with elements of traditional as well. 3 basic economic questions: What to produce, How to produce, Who gets it? david ricardo: british economist Economic goals provide the operational framework for managing and distributing scarce resources. the division of labor is the separation of the tasks in any economic system or organization so that participants may specialize Karl Max, Karl Marx was a German-born philosopher, economist, political theorist, historian, sociologist, journalist, and revolutionary socialist.