1. Final Exam Review
Unit 1: Economic Basics

2. 1. List and explain what the 3 Factors of Production are
Land: any natural resource or raw material used to produce a product
Labor: the workers needed to produce a product
Capital: any man-made products that are needed in order to produce a different product.

3. 2. Explain what government actions can affect the circular flow model

4. 3. What are the benefits of the U.S. Free Enterprise System?
Economic freedom: Individuals have the power to make their own economic decisions
Consumer Sovereignty: Consumers can make decisions of what to buy
Creation of Wealth: The motivation of profit leads to the creation of wealth

5. 4. How does competition influence markets in the Free Enterprise System?
It leads to several sellers of a product or service. Of these sellers, the one who offers the highest quality at the lowest price will have the most customers and the highest profit.

6. Capitalism
Socialism

7. 6. Explain what scarcity is and how it impacts economies
Scarcity: Having limited resources and unlimited wants
All economic decisions are made based on the ways a society addresses the issue of scarcity.

8. 7. Define economic freedom and explain its importance in the U. S
7. Define economic freedom and explain its importance in the U.S. Free Enterprise System.
Economic Freedom: ability of individuals to make their own decisions about what to buy and sell

9. 8. Explain the concept of competition
Competition: contest between companies to get consumers to buy their goods or services