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40 Cards in this Set
- Front
- Back
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factors of production (Adam Smiths def.)
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our resources and the goods and services we produce with those resources.
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Economics
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study of the allocation of the scarce factors of production.
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Land
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All natural resources (including water)
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Labor
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All paid work
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Capital
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Money and Goods (finished goods - tools, equipment) used in production and distribution.
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Management
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Any idea or information that helps organize and direct the production of distribution.
-patents, contracts, surveys, shift schedual, film script. |
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Traditional Economy
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Decisions about production usually repeat decisions made in earlier times or by provious generations. Continuity and Stability valued. personal connections for trade. Example: pre-rennaissance.
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Command Economy
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Decisions about production made by government. Government owns all factors of production, and distributes goods. Example Soviet Union in 50s - 60s.
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Market Economy
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Production decisions by individual consumers and businesses. gov. doesn't interfere. Example: England and beggining of industrial rev.
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Mixed Economy
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most countries today.
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Gross Domestic Product
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the value of all the goods and services produced
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Inflation
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an increase in the average level of prices. vs. deflation
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Unemployment
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the level of people actively looking for work who cannot find work
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Business cycle
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periods of expansion and recession.
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Characteristics of expansion
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-low unemployment
-high GDP -consumer spending high -inflation high |
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Characteristics of recession
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-unemployment rising
-low GDP -less consumer spending -prices lower - slower inflation |
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Sole Proprietorship
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business owned by 1 person-full control of operations. Most common but very small
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Partnership
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business where 2 or more people share ownership and control
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Corporation
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business owned by shareholders. not run by shareholders but by hired employees. Some are private:all stock owned by family. many public: stock traded on stock exchange. Can sue and be sued.
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Number of bussiness: most to least
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sole p
corp partner |
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Bussiness earning most to least
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corp
part sole p |
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Sole P advantage
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easy to start
be own boss flexible get all profits no separate taxes on business |
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Part advantage
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relitively easy to start
legal agreement to clarify each owners responsibility and share of profit more partners=more money more ideas, talents no separate taxes on business |
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corp advantage
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limited liability. Can only lose amount invested
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Sole p disadvantage
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unlimited liability
limited capital-limited by owners wealth and borrowing ability |
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part disadvantage
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unlimited liability
limited capital parters may disagree |
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corp disadvantage
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expensive and complicated
taxed twice...shareholders get dividends and pay taxes and corp pays taxes on profits. less privacy-law requires corps to disclose info about finances... could help competitors. |
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factors that can cause a change in demand
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changes in consumers incomes
changes in consumers attitudes/needs/preferences change in the price of a complimentary or substitute product population/market size |
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Factors that can change supply
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changes in input costs (land, labor, capital, management)
technological developments |
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market price
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where supply curve and demand curve intersect
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Bussiness earning most to least
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corp
part sole p |
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Sole P advantage
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easy to start
be own boss flexible get all profits no separate taxes on business |
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Part advantage
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relitively easy to start
legal agreement to clarify each owners responsibility and share of profit more partners=more money more ideas, talents no separate taxes on business |
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corp advantage
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limited liability. Can only lose amount invested
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Sole p disadvantage
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unlimited liability
limited capital-limited by owners wealth and borrowing ability |
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part disadvantage
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unlimited liability
limited capital parters may disagree |
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corp disadvantage
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expensive and complicated
taxed twice...shareholders get dividends and pay taxes and corp pays taxes on profits. less privacy-law requires corps to disclose info about finances... could help competitors. |
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factors that can cause a change in demand
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changes in consumers incomes
changes in consumers attitudes/needs/preferences change in the price of a complimentary or substitute product population/market size |
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Factors that can change supply
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changes in input costs (land, labor, capital, management)
technological developments |
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market price
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where supply curve and demand curve intersect
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