The Terrific Twelve Economic Concepts
The Terrific Twelve Economic Concepts Students Should Know
The Significant Seven plus:
Economic Systems: People and societies develop economic systems to deal with the basic economic problems raised by scarcity and opportunity costs. In Particular, economic systems answer these three basic economic questions: what to produce, how to produce, and for whom to produce. The three fundamental economic systems are market, command, and traditional. A simple illustration of a pure market economy is the Circular Flow Model.
Productivity: Productivity is the amount of output per unit of input used. The most common measure of productivity is labor productivity - output per hour worked.
Price (Supply and Demand): The price of a good or service is always determined by the interaction of supply and demand. Supply - The amounts of goods and services that people are willing and able to supply at various prices. Demand - The amounts of goods or services that people are willing and able to buy at various prices.
Money: Money is anything that is generally acceptable in exchange for goods and services. Money does not necessarily need to have any intrinsic value to serve as a medium of exchange. It is someone's willingness to accept it in payment that gives money its value in the exchange process.
Profit: Profit is the income left over for the owners of a business after all the costs of production have been paid. Profit is an incentive for entrepreneurs and a reward for taking a risk to start a business. Businesses who make a profit have successfully satisfied the wants of consumers.