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1.3: Unit 1- Basic Understandings, Vocabulary, and Objectives

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  • Unit 1 - Basic Understandings

    • The economic principles of scarcity and opportunity costs influence the economic choices of societies and individuals.
    • The economic systems of free enterprise, socialism, and communism share some characteristics but have different methods for making economic decisions.
    • The viewpoints of various economic philosophers have influenced the development of the free enterprise system in the United States.
    • The United States uses a free enterprise system that is continually changing.
    • The circular flow model can be used to represent the movement of resources in an economy.

    Unit 1 - Vocabulary

    free enterprise system – an economic system characterized by private ownership of businesses operated for profit with economic freedom for both consumers and producers

    scarcity – the condition in which there are not enough resources available to produce everything that individuals demand

    opportunity cost – the value of goods and services that are given up in order to obtain an alternative good or service

    factors of production – the resources needed to produce goods and services, including land, labor, capital, and entrepreneurship

    resources – supplies of something of value

    economic system – a process created to manage the production, consumption, and distribution of goods and services

    circular flow model – a visual representation showing the relationship between the factor market and the product market

    Unit 1 - Related Vocabulary

    • choice
    • competition
    • firms
    • incentives
    • consumers
    • producers
    • socialism
    • communism
    • capitalism

    What is Economics?

    Why Should You Study Economics?

    Unit 1 TEKS

    (1) Economics. The student understands the concepts of scarcity and opportunity costs. The student is expected to:

    (A) explain why scarcity and choice are basic economic problems faced by every society;

    (B) describe how societies answer the basic economic questions: what to produce, how to produce, and for whom to produce;

    (C) describe the economic factors of production: land, labor, capital, and entrepreneurship; and

    (D) interpret a production-possibilities curve and apply the concepts of opportunity costs and scarcity.

    (4) Economics. The student understands free enterprise, socialist, and communists economic systems. The student is expected to:

    (A) explain the basic characteristics of economic systems, including property rights, incentives, economic freedom, competition, and the role of government;

    (B) contrast current and historic examples of the free enterprise system, socialism, and communism using the basic characteristics of economic systems; and

    (C) analyze the contributions of various economic philosophers, including Friedrich Hayek, Milton Friedman, John Maynard Keynes, and Adam Smith, and their impact on the U.S. free enterprise system.

    (5) Economics. The student understands the basic characteristics and benefits of the U.S. free enterprise system. The student is expected to:

    (A) explain the benefits of the U.S. free enterprise system, including individual freedom of consumers and producers, variety of goods, responsive prices, investment opportunities, and the creation of wealth; and

    (B) analyze recent changes in the basic characteristics, including private property, incentives, economic freedom, competition, and the limited role of government, of the U.S. economy.

    (7) Economics. The student understands the circular-flow model of the economy. The student is expected to:

    (A) interpret the roles of resource owners and firms in a circular-flow model of the economy and provide real-world examples to illustrate elements of the model; and

    (B) explain how government actions affect the circular-flow model.

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