1. Unit 1 test prep!
Chapter 1,2,3,8

2. Vocab: Scarcity Need Want
Fundamental economic problem facing all societies, resulting from a combination of scarce resources and people’s virtually unlimited needs and wants
Need
a basic requirement for survival, (food clothing shelter)
Want
A want is not necessary for survival
Factors of Production: Resources required to produce things we would like to have.
Land:
Labor
Capital
Entrepreneur
Vocab:

3. Vocab Productivity Economics Economic Systems Social Security
Measure of the amount of output produced in a specific time period with a given amount of resources; normally refers to labor, but can apply all factors of production
Economics
Social science dealing with how people satisfy seemingly unlimited and competing needs and wants with the careful use of scarce resources.
Economic Systems
Command, Market, Tradition, Mixed : use your Economic Systems chart.
Social Security
Federal program of disability and retirement benefits that covers most working people.
Inflation
Sustained rise in general level of prices of goods and services.
Fixed Income
Income that does not increase over time
Private Property Rights
People may own and control their own possessions
Vocab

4. Vocab Profit Profit Motive Voluntary Exchange Competition
Extent to which people are better off in the end
Profit Motive
Force that encourages people to make business ventures
Voluntary Exchange
Buyers and sellers actively exchanging in the market on their own
Competition
Struggle among sellers to attract customers while lowering costs
Consumer Sovereignty
Role of consumer as ruler of the market in determining the types of goods and services produced.
Charter
Gov’t document that gives company permission to create a corporation
Stock
Certificate of ownership in a corporation
Dividend
Check paid to stockholders, usually quarterly representing a portion of the corporate profits
Vocab

5. Vocab Merger Depreciation Horizontal Merger Vertical Merger
A combination of two or more businesses to form a single firm.
Depreciation
is a noncash charge for the general wear and tear on capital goods.
Horizontal Merger
Combination of firms producing the same kind of product.
Vertical Merger
Combination of firms involved in different steps of manufacturing marketing, or sales.
Conglomerate
are firms that have at least four businesses that make unrelated products, none of which is responsible for a majority of sales.
Multinational
can move resources, goods, services, and financial capital across national borders.
Labor Union
Organization of workers formed to represent member’s interests of employment matters
Vocab

6. Cooperative
Voluntary association of people formed to carry of economic activity benefiting its members.
Professional Association
Group of specialized occupation that works to improve condition and skills of employment
Public Utility
Credit Union Service CO-OP
Cash Flow
comprehensive measure of its profits because it represents the total amount of after-tax income generated by the company operations.
Vocab

7. Every choice has a opportunity cost and Trade-0ff
Know the difference
Economic Growth increases the PPF
Division of labor = assembly line
Economic Questions
What, How, Whom
Resources inside the PPF are IDLE, or Insufficient
Utility- satisfaction
Common Stock get to vote
GM is a multinational
Double taxation is a disadvantage of Multinationals

8. MEA=Professional Association
BP + Speedway would be a horizontal merger
Goals of Capitalism
Characteristics of Capitalism
Economic Freedom, Voluntary Exchange, Private Property Rights, Profit Motive, Competition

10. Competition keeps quality high and prices low
Social Security will pay for people injured.
Sole proprietorship #1 business in America