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B&M Econ Ch 2
| Term | Definition |
|---|---|
| Economics | The study of how individuals, and groups of individuals, strive to satisfy their needs and wants by making choices |
| Scarcity | Limited resources for unlimited wants and needs |
| Factors of Production | All of the economic resources necessary to produce a society’s goods and services. Ex: Wheat in the ground |
| Four Factors of Production | Natural resources Labor resources Capital resources Entrepreneurial resources |
| Natural Resources | Raw materials from nature that are used to produce goods Can often be processed in various ways to create goods Economies of many countries are decided upon by their natural resources. Ex: Central or Latin America…coffee and bananas |
| Renewable Resources | Resources would be anything that can replace itself on a regular basis. Ex: Wheat, cattle, etc. |
| Non-Renewable Resources | Resources are those taken that can’t be replaced. Ex: Coal, oil, iron, etc. |
| Labor Resources | People who make the goods and services for which they are paid Skilled or unskilled, physical or intellectual |
| Capital Resources | The things used to produce goods and services Buildings, materials, equipment, money |
| Entrepreneurship | The process of recognizing a business opportunity, testing it in the market, and gathering the resources necessary to start and run a business |
| Entrepreneur | The individual who undertakes the creation, organization, and ownership of a business The person who accepts the risks and responsibilities of business ownership to gain profits and satisfaction |
| Entrepreneurial resources | Entrpreenueurial resources are the owners, while Labor resources are the workers |
| Economics | The study of how individuals and groups of individuals strive to satisfy their needs and wants by making choices |
| Opportunity Cost | The value of the choice you did NOT choose |
| Economic Systems | The methods societies use to distribute resources. Two most basic types are a Market economy and a Command economy |
| Marketplace | Where buyers and sellers meet to exchange goods and services May mean an open market, a mall or store, or on the internet. Resources are privately owned. |
| Market Economies | Government works to promote free trade and prevent unfair trade practices Consumers choose their occupations and decide where to live, where to shop, and what to buy. |
| Command Economy | An economic system in which a central authority makes the key economic decision so government dictates. |
| Socialism | A moderate command economy Some private enterprise is allowed;people do get to vote Government owns major resources Communication…Radio & TV Transportation…Rail and Air Main resource…steel, coal, etc. |
| Price | The amount of money given or asked for when goods and services are bought or sold |
| Supply | The amount of goods and services that producers will provide at various prices |
| Demand | The amount or quantity of goods and services that consumers are willing and able to buy at various prices |
| Equilibrium Price | The point at which the quantity demanded and the quantity supplied meet. |
| Profit Motive | The desire to make a profit...the reward to taking a risk and starting a business |
Created by:
Mrs. Roberts