Economic Concepts

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Economic Concepts
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FYI

• The 20 percent of the worlds people who live in
  the wealthiest nations consume 86 percent of the
  worlds goods and services. The 20 percent who
  live in the poorest nations consume just 1.3
  percent

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Goods, Services, and Consumers

• Goods are items that are economically useful or
  satisfy an economic want. They are tangible and
  can be classified as consumer/capital and
  durable/nondurable.

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Consumer
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Capital
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durable
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nondurable
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• Services are work performed for someone and are
  intangible.
• Consumers use goods and services to satisfy wants
  and needs.

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Question

• Why do you think the United States has been
  called a society of consumption?

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Value, Utility, and Wealth

• Value is worth expressed in dollars and cents.
  Scarcity by itself is not enough to create value.
  For something to have value, it must also have
  utility.
• Utility is a goods or services capacity to
  provide satisfaction, which varies with the needs
  and wants of each person.

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• Wealth is the accumulation of goods that are
  tangible, scarce, useful, and transferable to
  another person. Wealth does not include services.

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The Circular Flow of Economic Activity

• Markets are locations/mechanisms for buyers and
  sellers to trade. They are classified as local,
  regional, national, global, and cyberspace.

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• A factor market is where people earn their
  incomes. Factor markets center on the four
  factors of production land, capital, labor, and
  entrepreneurs.

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• A product market is where people use their income
  to buy from producers. Product markets center on
  goods and services.

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