Economics Honors

Chapter 19

19-1 Key Ideas

Goods- tangible things produced

Services- work preformed for someone

else

19-1 Key Ideas

Factors of production- resources

necessary to produce goods and services
Natural resources
Labor
Capital
Manufactured goods used to make other goods
and services
Satisfies wants indirectly
Entrepreneurs- individuals who starts a new

business, product, or improve processes

19-1 Key Ideas

Gross Domestic Product- total value of

all final goods and services produced in
a country during a single year
Intermediate goods are not included

Standard of living- the quality of life

based on the possession of necessities
and luxuries that make life easier

19-1 Key Ideas

GDP is only a matter of economic

performance, it does not measure the
overall well being of a society

NDP (Net Domestic Product)- takes GDP

and subtracts the total loss in value of
capital goods caused by depreciation

19-2 Key Ideas

Market- free and willing exchange of

goods and services

Market systems- flow is circular

19-2 Key Ideas

The consumer sector

Factor markets- the markets where
productive resources are bought and
sold
Consumers earn their income
Workers earn wages, salaries, and tips in

exchange for labor

People who own land rent it
People that own capital exchange it for
interest

19-2 Key Ideas

The Business Sector

Product market- markets where
producers offer goods and services for
sale
Sell goods and services to consumers
Businesses use the profit to pay for the

natural resources, labor, and capital they

use

19-2 Key Ideas

The business sector also purchases

some of the output it uses
Capital goods- so that it can produce more

goods and services

Tools
Factories
Etc.

19-2 Key Ideas

The Government Sector

All 3 levels of government
Produces goods and purchases
productive inputs
The government receives revenue from
the services it sells
Tuition
Fees
taxes

19-2 Key Ideas

The Foreign Sector

We sell and buy products from foreign

markets

19-2 Key Ideas

Promoting Economic Growth

Economic growth is a major goal of our

economy
Improves our standard of living

19-2 Key Ideas

Productivity- measure of the amount of

output produced by a given level of
input in a specific time

Specialization- concentrating on goods

and services they can produce better
than anyone else

19-2 Key Ideas

Division of labor- breaking down a job

into small tasks performed by different
workers

Economic interdependence- we rely on

others and others rely on us to provide
goods and services