What Is An Economy?

Chapter 13

Civics Notes

March 24

1. Factors of production- The resources people have for producing goods and services to satisfy their wants.
2. Capital- Anything produced in an economy that is used to produce other goods and services.
3. Consumption- The act of buying or using goods and services.
4. Opportunity cost- The highest valued benefit given up when a choice is made.
5. Scarcity- That resources are always limited compared with the number and variety of wants people have.
6. Quantity- Amount.
7. Technology- The practical application of science to commerce or industry.
8. Traditional economy- The basic economic decisions are made according to long-established patterns of behavior that are unlikely to change.
9. Command economy- The government or a central authority owns or controls the factors of production and makes the basic economic decisions.
10. Market economy- A system in which private individuals own the factors of production and are free to make their own choices about production, distribution, and consumption.

March 25

1. Profit- The difference between the total cost of production and the total revenues received from buyers.
2. Invest- To use your money to help a business get started or grow, the hope that the business will earn a profit in which you can share.
3. Free enterprise- Refers to the system in which individuals in a market economy are free to undertake economic activities with little or no control by the government.
4. Capitalism- A system in which people make their own decisions about how to save resources as capital and how to use their capital to produce goods and provide services.
5. Mixed economy- One that is a mixture of the three basic systems.

March 26

1. Economy- The system by which people in society make decisions about how to use their resources to produce goods and services.