Transcript Economic Principles

GOODS AND SERVICES
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Goods- production output in the form of material items such as books,
movies, or automobiles
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Services- Work performed for someone else (hair stylist, home repair,
entertainment)
•
Factors of Production
• Resources necessary to produce goods and services
• Natural Resources- Actual surface land, fish, animals, forest, mineral
deposits
• Labor- includes anyone who works to produce goods and services
(human resource)
• Capital- manufactured goods to make other goods and services
(machines, buildings, tools used for assembly- capital goods)
• Entrepreneurs- individual who starts a business, introduces new
products, and improve processes
GROSS DOMESTIC PRODUCT
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GDP is total value, in dollars, if all the final goods and services
produced in country during a single year
• Measuring GDP- multiply price of each good by the quantity
produced and then add the amounts
• Quantity vs. Quality- GDP measures quantity produced, not
quality produced
• Net Domestic Product- accounts for the fact that some
production is only due to depreciation
• Cars and refrigerators will depreciate at moment of purpose
ECONOMIC SECTORS AND CIRCULAR FLOW
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Market- Free and willing exchange of goods and services between buyers
and sellers
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Economic activity is shown by a circular flow of resources among
consumer sector, business, government and foreign sector
Consumer Sector
• Consumers earn their income in factor markets
• workers earn wages, tips, and salaries
• Business Sector
• Individuals spend money in product markets where goods and services
are sold
• Will purchase capital goods to continue producing more goods
• Government Sector
• Federal, state and local
• purchases resources in factor markets
• Taxes, fees, tuition, hospital fees are examples of revenue
• The Foreign Sector
• Sell and buy goods and services from other countries
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PROMOTING ECONOMIC GROWTH
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Economic growth occurs when country’s goods and services
increases over time
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Productivity- efficient use of resources/ measured by amount of
output for produced by a given level of inputs over a specific
period of time
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Specialization- concentrating on producing goods and services
that they can do better than anyone else
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Division of Labor- breaking jobs down into small tasks performed
by different workers
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Human Capital- the sum of people’s skills, abilities, and
motivation
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Economic Interdependence- we rely on others, and they rely on
us to provide goods and services
HOMEWORK!!
• Write 4 clarifying questions that relate to the notes on this power
point and bring them in next class. It should be ready to be
checked at beginning of class.
• What if I have no questions….Sure you do!! Create questions that
you would like to see on the quiz or test, or that other students
may want to know the answer to