- Slides: 6
ECONOMICS Chapter 1 Review
SCARCITY AND THE SCIENCE OF ECONOMICS Most resources needed for production are limited, or scarce. Consumers' needs and wants must be met through the production of durable goods, nondurable goods, consumer goods, etc. Societies must decide WHAT to produce, HOW to produce it, and FOR WHOM it is to be produced. Economics describes, analyzes, explains, and predicts trends in a nation's gross domestic product (GDP).
OUR ECONOMIC CHOICES Producers must determine the four factors of production, including land, capital, labor, and entrepreneurs. Entrepreneurs are risk-taking individuals, or groups, who start new businesses. Everything produced involves the four factors of production.
OUR ECONOMIC CHOICES Economists use tools like the production possibilities curve to consider how resources are employed, and what are the opportunity costs of production choices. Consumers make trade-offs, or alternative choices, when deciding what to buy. In the products they buy, consumers have the right to safety, choice, information, and redress Consumers have the responsibility to act ethically when dealing with producers and sellers.
USING ECONOMIC MODELS Economic growth is when a nation’s total output of goods and services increases over time. Growth entails putting human capital to use efficiently, which often includes specialization. • Economic interdependence describes how we rely on others, and others rely on us, to provide most of the goods and services we consume.
USING ECONOMIC MODELS The market is the key mechanism of the circular flow of goods and services. Economic models are diagrams that help economists understand complex economic data or concepts. In a free enterprise economy, or market economy, consumers and privately owned businesses (not the government) make economic decisions. How well the market functions affects the standard of living, or quality of life, of citizens.