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VoiceThread overview of the basic economic problem and the decision-making process

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Scarcity: the limited resources available to satisfy the unlimited needs and wants of people Economics: the study of now peoploe choose to use limited resources to satisfy their unlimited needs and wants Opportunity Cost: the most attractive alternative given up when a choice is made Supply: the relationship between the amount of a good or service that businesses are willing and able to make available at a given price Demand: the relationship between the amount of a good or service that consumers are willing and able to purchase at a given price Market Price: the point at which supply and demand cross--also call the equilibrium price Inflation: an increase in the average prices of goods and services in a country Factors of Production: the three types of resources used to produce goods and services (natural, human, and captial) Economic System: the method a courntry uses to answer the basic economic questions Command Economy: the government or a central-panning committee regulates the amount, distribution, and price of everything produced. Market Economy: based on the forces of supply and demand--individual companies and consumers make the decisions about what, how, and for whom items will be produced. Mixed Economy: a blend between government involvement in business and private ownership Privatization: the process of changing an industry from publicly to privately owned Industrialized Country: a country with strong business activity that is usually the result of advanced technology and a highly educated population Infrastructure: a nation's transportation, communication, and utility systems and are actively involved in international trade Less-Developed Country: a country iwth little economic wealth and an emphasis on agriculture or mining Developing Country: a country that is evolving from less developed to industrialized Absolute Advantage: A situation that exists when a country can produce a good or service at a lower cost than other countries Comparative Advantage: a situtation that exists when a country specializes in the production of a good or service at which it is relatively more efficient Gross Domestic Product: measures the output of goods that a country produces within its borders Gross National Product: measures the total value of all goods and services produced by the resources of a country. Balance of Trade: the difference between a country's exports and imports Foreign Exchange Rate: the value of one country's money in relation to the value of the money of another country. Foreign Debt: the aount a country owes to other countries Consumer Price Index: the monthly U.S. federal government report on inflation
 * Important Terms for this Chapter**

NOTE: Refer to the Chapter 2 Summary on page 52 for addtional important concepts to learn from this chapter.
 * Important Concepts**
 * The decision-making process (page 29)
 * Scarcity is a fact of economics
 * There are two basic causes for inflation: demand-pull and cost push (page 34)
 * The three elements in the factors of production are natural, human, and capital resources (page 36)
 * The factors of production are used individually or in combination to produce the goods and services in any economy (page 37)
 * Capitalism is found in market economies and has three main characteristics--the right to private property, profit motive, and a free, competitive marketplace (pp 38-39)
 * The development factors of a country include the literacy level, technology level, and level of dependency on agriculture (page 41)

=‍‍Illustrative Graphs from Chapter 2=

‍‍The Decision-Making Process

 * [[image:swhsgbiz/ch_2_decision_making_process.jpg caption="ch_2_decision_making_process.jpg"]] ||
 * ch_2_decision_making_process.jpg ||

‍‍The Supply-Demand Curve

 * [[image:swhsgbiz/Supply_Demand_Graph.jpg caption="Supply_Demand_Graph.jpg"]] ||
 * Supply_Demand_Graph.jpg ||

‍‍Levels of Economic Development

 * [[image:swhsgbiz/ch2_levels_of_economic_development.jpg caption="ch2_levels_of_economic_development.jpg"]] ||
 * ch2_levels_of_economic_development.jpg ||