1st Quarter, Unit 2: Economics Fundamentals (Ch
... Be able to define or explain:
factors of production:
land (natural resources)
labor (human resources)
capital (factories, machines,
significance of scarcity in econ
importance of choice
costs and benefits
Pig Pri ...
Chapter 1 Vocabulary Activity
... 1. Why does investing in human capital make sense both on broad economic and individual
scale? (human capital)
2. What factor of production is thought of as the driving force in the economy, and why? (entrepreneur)
3. Why are land, capital, labor, and entrepreneurs important for a producer? (factors ...
Econ Unit 1 Study Guide Terms- Write the word, pg number
... 14. What are the benefits of the US free-enterprise system to producers and consumers? 2.2
15. What are the goals of US economic policy? 2.3
16. Why are scarcity and choice basic economic problems? 2.3
17. How do laws against false advertising promote economic equity? And which of the economic goals ...
... Subsistence: people make goods for themselves and their families. There is little
surplus. To subsist is to survive!
Cottage vs. Commercial Industry: Small industry that begins in the home vs. a large,
System that lets competition among businesses determine the price of products. ...
... and services are produced
“The consumer is king”
The amount of goods or services
producers are willing to make and sell at
a given price
Capitalism and socialism are somewhat opposing
... Capitalism (in action)
Free Market Economy – Ask yourself what the term free market sound likes to you.
Philosophy of Capitalism - Capital (or the "means of production") is owned, operated, and traded for the
purpose of generating profits for private owners or shareholders. Emphasis on individual pr ...
Principles of Business, Finance, and Marketing
... After completing this chapter, you’ll be able to:
• Define scarcity
• List the four factors of production
• Identify the differences between market and
• Explain why most countries prefer a mixed
19th Century Economics
... demand, most capitalist
economists promote “laissez
faire” (French term meaning “let
them do as they will”) policies
• In this approach, government
does nothing to regulate the
economy – they do not try to
control prices or wages, they also
provide no protection from
monopolies or foreign goods
• Ca ...
... ◦ The study of how we make decisions
... the belief that people’s greatest loyalty
should not be to a king or an empire, but
to a nation of people who share a
common culture and history.
Unit 1 recap
... CURVE to show one way in which societies make choices and
Our PPF will demonstrate the law of increasing opportunity
The PPF can demonstrate productive efficiency; that is: the
most efficient use of a society’s economic resources
Another term we need to know is allocative effic ...
Introduction to Economics Notes Assignment
... the basic economic problem
characteristic of resources and wants
the two words that describe a good and the two words that describes a service
sentence that indicates what scarcity requires of us
the two definition of economics
the two things that help to determine how society deals with the problem ...
... 4. entrepreneurs
Ch. 14- The Economy
... Divest- selling off part of a business
Market forces- supply and demand
determine production and prices
... or by offering some services
Profits are obtained when there is more income than expenses
Chapter 1 - Humble ISD
... • Non-Durable Goods-last less than 3yrs.Ex:
food, clothing, toothpaste, soap, ect.
• Consumer Goods: for self-use
• Capital Goods: used to make $$
The type of economy is determined by the extent of government
... The type of economy is determined by the extent of government involvement in
economic decision making.
Characteristics of major economic
Private ownership of property / resources
... level of inputs in specific period of time
Introduction to Business
... prices to double at various rates of growth
Example: If houses increase in price at 9% a
year, how long for the price to double?
Answer: Divide 72 by 9% and you get the
approximate number of years it takes to
double the price, 8 years
Chapter 1 Basic Economics
... Circular Flow of Economic Activity
Market – location or other mechanism that allows buyers and sellers to
exchange a certain economic product.
Product Markets – producers sell their goods and services to consumers
Factor Markets – where individuals earn their incomes, where
productive resources are ...
Name - الجامعة الإسلامية بغزة
... and/or of higher quality than any other country. n
10. If productivity increases, prices to consumers will tend to increase as well. N
11. A negative balance of trade results when a country imports more than it exports. Y
12. Inflation occurs when there are widespread price decreases throughout an e ...
Economic calculation problem
The economic calculation problem is a criticism of using economic planning as a substitute for market-based allocation of the factors of production. It was first proposed by Ludwig von Mises in his 1920 article ""Economic Calculation in the Socialist Commonwealth"" and later expanded upon by Friedrich Hayek. In his first article, Mises describes the nature of the price system under capitalism and describes how individual subjective values are translated into the objective information necessary for rational allocation of resources in society.In market exchanges, prices reflect the supply and demand of resources, labor and products. In his first article, Mises focused his criticism on the inevitable deficiencies of the socialisation of capital goods, but Mises later went on to elaborate on various different forms of socialism in his book, Socialism. Mises and Hayek argued that economic calculation is only possible by information provided through market prices, and that bureaucratic or technocratic methods of allocation lack methods to rationally allocate resources. The debate raged in the 1920s and 1930s, and that specific period of the debate has come to be known by economic historians as The Socialist Calculation Debate. Mises' initial criticism received multiple reactions and led to the conception of trial-and-error market socialism, most notably the Lange–Lerner theorem.Mises argued in ""Economic Calculation in the Socialist Commonwealth"" that the pricing systems in socialist economies were necessarily deficient because if a public entity owned all the means of production, no rational prices could be obtained for capital goods as they were merely internal transfers of goods and not ""objects of exchange,"" unlike final goods. Therefore, they were unpriced and hence the system would be necessarily irrational, as the central planners would not know how to allocate the available resources efficiently. He wrote that ""rational economic activity is impossible in a socialist commonwealth."" Mises developed his critique of socialism more completely in his 1922 book Socialism: An Economic and Sociological Analysis, arguing that the market price system is an expression of praxeology and can not be replicated by any form of bureaucracy.However, it is important to note that central planning has been criticized by socialists who advocated decentralized mechanisms of economic coordination, including mutualist Pierre-Joseph Proudhon, Marxist Leon Trotsky and anarcho- communist Peter Kropotkin before the Austrian school critique. Central planning was later criticized by socialist economists such as Janos Kornai and Alec Nove. Robin Cox has argued that the economic calculation argument can only be successfully rebutted on the assumption that a moneyless socialist economy was to a large extent spontaneously ordered via a self-regulating system of stock control which would enable decision-makers to allocate production goods on the basis of their relative scarcity using calculation in kind. This was only feasible in an economy where most decisions were decentralised. Trotsky argued that central planners would not be able to respond effectively to local changes in the economy because they operate without meaningful input and participation by the millions of economic actors in the economy, and would therefore be an ineffective mechanism for coordinating economic activity.