Document Sample

1. Regardless of how a country lets its market operate, there are key
economic questions which must be answered because of ?

 scarce     economic resources
    2. What are the 3 economic
 What  goods and services are to be
 How should the goods and services be
 For whom should the goods and
  services be produced?
3. How do you determine what to produce?

   Nations differ in their wants just as individuals do. Meeting some or
    all of its people’s wants is a challenge. A country must learn how to
    best use its resources.

 Decisions    must be made on which
    kinds of goods and services are
    valued the most and best serve the
 4.. How do you determine how to
       produce something?
A country with a great many people but limited capital resources might
   build roads by having many workers use equipment that requires
   much manual labor. In another country road building may be
   accomplished with only a few workers using labor saving equipment.
   The second method is more effective the country does the job with
   more capital resources and less labor.

   Economic resources combine in different
    ways to produce the same goods and
    services. Each nation decides which
    combination of resources will best suit its
5. How do you determine for whom
           to produce?
   A nation must decide which of its citizens
    should benefit from the production of goods
    and services. It must also consider whose
    needs and wants are the most critical.
How goods and services will be distributed. Should they be shared
  equally among the people? Should people who contribute more get
  more? If you have the money, shouldn’t you be able to buy anything
  you want? A large share of a country’s resources may be used to
  produce capital (tractors) and therefore limit the country’s production
  of consumer goods. (CD players). As a result, consumer goods
  become scarce.
6. What is an Economic system?

anation’s plan for answering the key
 economic questions.
   7. What are the 3 types of economic

 custom  based economy,
 directed (planned) economy
 market economy
   8. What is meant by custom-based

 goods are produced the way they have
 always been produced. Handed down
 generation to generation. Change and
 growth occur slowly in countries
 whose economies follow customs and
 in which the people are poor in material
  9. What is meant by directed or
       planned economy?
 resourcesare owned and controlled by
 the government.

The officials of govt usually decide what and how
 goods will be produced and how they will be shared.
 They plan all phases of the economy and command
 that the plans be carried out, using the military or a
 police force to do so if necessary. The average
 citizen has little to say about how these three
 economic questions are answered. The freedom of
 the people is always limited in this option.
    10. What is meant by market economy?

   an economy in which individuals are free to
    engage in business transactions with buyers
    who are willing and able to buy and sellers
    who supply goods and services from which
    they earn a profit. Generally found in
    countries with democratic form of govt.

    The 3 questions are answered by individuals
    through buying and selling activities in the
11. What is meant by marketplace?

 anyplace where buyers and sellers
 exchange goods, services and some
 form of money.

No one tells the consumer what to buy and
 no one tells businesses what to make and
 sell. Consumers and businesses make
 economic decisions based on their own
12. What type of economic system
      does the US have?
 market   economy or capitalism
 13. What is meant by capitalism?

 economic  resources are usually
 privately owned by individuals rather
 than by the government. They are free
 to decide what to produce with the
      14. What is meant by free or private

 the  freedom of the individual to choose
    what to produce.

   They refer to a system in which most economic
    resources are privately owned and decisions
    about production and distribution are largely
    made by voluntary exchange in the
  15. What is meant by voluntary
 buyers and sellers make their own
 economic decisions to determine what
 the price will be for goods and services
 produced and sold
16. What are the five major features or
rights of our market economy?

 private enterprise
 private property
 Profit
 Competititon
 freedom of choice
       17. What is a business?

 anestablishment or enterprise that
 supplies us with goods and services in
 exchange for payment in some form
     18. What is private enterprise?

   the right of the individual to choose whether to own a business,
    what business to enter and what to produce with only limited
    government direction. This private enterprise right ensures
    your freedom to decide how you will earn a living as long as
    you obey the law in doing so.

As a businessperson you are free to offer
  goods and services
  places of your choice.
  Free to succeed or to fail in a business
  There are some regulations that prevent you from performing activities that
  would harm others. EX. Not dispose of chemical wastes to pollute
  environment or practice surgery or medicine without a license
    19. What does the right to private
            property mean?
 you   can own, use or dispose of things
    of value.

   You can sell them, give them away, throw them away --
    as long as you don’t violate a law in doing so
 20. Businesses also have right to own
 property. What does it include?

 Land
 Buildings
 Tools
 thegoods the business produces
 The right to dispose of their property in
  any lawful way.
21. Why do business supply goods
 and services to the marketplace?
 To   earn money.
    22. What is meant by profit?

    money left from sales after
 the
 subtracting all the costs of operating a
 23. Why are business owners are
     entitled to make profits?
 a. they run the risk of losing the money
  invested to start business
 b. they face the extra hours of work and
  stress in owning a business
    24. What is meant by profit motive?

 the   desire to work hard and be creative
    to earn a higher profit.

   It helps make the economy strong. Because of it people are willing
    to invest money in a business and to develop new products to
    satisfy customer wants. Profit motive is not the only reason but it is
    the heart of the private enterprise system. Also it can be
    a. some enjoy bringing out new products or improve existing ones
    b. pleasure from knowing what they do makes people happier
    c. some like excitement of starting and running a new business
25. What is meant by competition?

 the rivalry among businesses to sell
  their goods and services to buyers.

You make choices by
  comparing prices
  comparing quality
  comparing appearances, usefulness and appeal of the
  goods and services

if not satisfied you can buy from someone else the next
     26. What does competition
 business  owners to improve products,
 offer better services,
 keep prices reasonable
 produce new things
   27. What is meant by freedom of
    have the right to buy where and
 you
 what you please

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