Vocabulary Preview Economics
Basic Economic Terminology and Economic Systems
PRINCIPLES OF ECONOMICS
Society and Scarce Resources: – The management of society’s resources is
important because resources are scarce.– Scarcity. . . means that society has limited
resources and therefore cannot produce all the goods and services people wish to have.
– This is the classical economic view…– What do you think of this definition? What
factors does this definition leave out?
Scarcity or Allocation??
Scarcity of resources vs. allocation of resources
Factors of Production: Land, Labor, capital
entrepreneurs
• The building blocks of capitalism
Opportunity cost: The Cost of Something Is What You Give Up to Get
it.
LA Laker basketball star Kobe Bryant chose to skip college and go straight from high school to the pros where he has earned millions of dollars.
But Michael Jordan earned his college degree and went to the pros
Paradox of value
Utility: The amount of usefulness we get from a product or service. It tends
to decline with number or reptition
Invisible hand
Factors of Production
• Land
• Labor
• Capital
• Entrepreneur
Mixed Economy (social democracy)
• Welfare states• Generous welfare and
health benefits• 6 week vacation• Family and medical
leave• Single-payer health
care• High tax rates
Command (communist economy):government ownership of all parts of
the economy/also controls social lives of the people
