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This basic problem of scarcity is faced by all individuals, organizations, businesses and governments. Scarcity exists because human wants exceed the capacity of available resources. Define scarcity as a basic condition that exists when unlimited wants exceed limited productive resources. All wants cannot be filled, trade-offs are inevitable when deciding what to produce. Wants are unlimited, the total resources of a society including natural resources, human resources, capital goods and entrepreneurship are limited resulting in scarcity. TERMS IN THIS SET (19) The student will explain why limited productive resources and unlimited wants result in scarcity, opportunity costs, and tradeoffs for individuals, businesses, and governments. Specialization is the concentration of the productive efforts of individuals and firms on a limited number of activities. Benefits: divides jobs evenly and more efficient. Define "division of labor" and "specialize" and identify the benefits of both as they relate to markets and economics DOL is the assignment of different part of a manufacturing process to different people in order to improve efficiency. Mixed economies are market based, but government plays a limited role. The government controls all means of production in a Command economy. Market economies are based on exchange or trade. Traditional economies rely on habit, custom or ritual to decide means of production. Explain how a traditional, command, market and mixed economic systems answer the three basic economic questions. Who consumes goods and services? Based on both social values and goals. How should goods and services be produced? Factors of production. What goods and services should be produced? Anything to satisfy needs and wants. Identify and explain the three basic economic questions. The method used by a society to produce and distribute goods and services. TERMS IN THIS SET (14) Define economic system. Price, origin, and producer have no bearing on whether a product is a consumer or an industrial item. Consumer goods and services are purchased and used by the ultimate consumer. Industrial products are purchased by producers for resale, to use in making other goods and services, or for use in their operations. What determines whether an economic product is an industrial product or a consumer product?ĭ) The price of the product C) Who buys and uses the product Nonrenewable resources cannot be replenished after use. Nonrenewable resources are natural resources that may become entirely depleted. Capital goods are all manufactured or constructed items that are used to produce goods or services. Human resources are the people who work to produce goods or services. Natural resources are found in nature and are used to produce goods and services. Using a stream to supply water to a field in order to grow crops is an example of using.ĭ) natural resources. In other words, you might want more than one thing at the same time.
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This means that your wants will change, not remain the same. Wants are not consistent but vary from person to person and from age group to age group. In other words, when one want is satisfied, there are other wants waiting to take its place. A characteristic of human wants is that they are. Wants are considered unlimitedīecause everyone has them, they change, and people are not able to obtain enough resources to satisfy all of their wants. Economics is concerned with economic wants. Economic and noneconomicĮconomic wants have monetary values attached to them, while noneconomic wants are free. TERMS IN THIS SET (44) Into what two categories can wants be divided?ĭ.