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Economic Principles . Ch. 18&19. Goods and Services. Goods- production output in the form of material items such as books, movies, or automobiles Services- Work performed for someone else (hair stylist, home repair, entertainment) Factors of Production

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Economic Principles

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goods and services
Goods and Services
  • Goods- production output in the form of material items such as books, movies, or automobiles
  • 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
Gross Domestic Product
  • 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
Economic Sectors and Circular Flow
  • Market- Free and willing exchange of goods and services between buyers and sellers
  • 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
promoting economic growth
Promoting Economic Growth
  • Economic growth occurs when country’s goods and services increases over time
  • Productivity- efficient use of resources/ measured by amount of output for produced by a given level of inputs over a specific period of time
  • Specialization- concentrating on producing goods and services that they can do better than anyone else
  • Division of Labor- breaking jobs down into small tasks performed by different workers
  • Human Capital- the sum of people’s skills, abilities, and motivation
  • Economic Interdependence- we rely on others, and they rely on us to provide goods and services
  • 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