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SCARCE GOOD: A resource with an available quantity less than its desired use. Scarce resources are also called factors of production. Scarce goods are also termed economic goods. Scarce resources are used to produce scarce goods. Like the more general society-wide condition of scarcity, a given resource is scarce because it has a limited availability in combination with a greater (potentially unlimited) productive use. It's both of these that make it scarce. In other words, even though an item is quite limited it will not be a scarce resource if it has few if any uses (think pocket lint and free good).
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Lesson 17: Money | Unit 2: More About Money
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Page: 10 of 25
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- The four functions of money:
- Medium of exchange: money makes it easier to buy, sell, produce, and consume goods and services.
- Measure of value: prices are stated in terms of the monetary unit.
- Store of value: value can be stored over time with money.
- Standard of deferred payment: future payments are also in terms of the monetary unit.
- Using money as a medium of exchange eases the exchange process, makes it more efficient, and frees resources for production.
- Using money as the unit for prices gives a measure for value, that is, how much value we place on a good.
- Price inflation is the nemesis for the store of value function of money.
- Money is used as a standard for buying now and paying later.
- The four characteristics of money:
- Durable: It helps to retain value from one exchange to do the next and store value for future exchanges.
- Divisible: It lets us accurately match an amount of money to the precise value of a good.
- Transportable: It allows us to conduct exchanges far and wide, to go where we need to go for an exchange.
- Non-counterfeitable: It keeps the value of money from being diluted.
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FACTORS OF PRODUCTION Labor, capital, land, and entrepreneurship used by society to produce consumer satisfying goods and services. Factors of production are also termed resources or scarce resources.
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A communal society, a prime component of Karl Marx's communist philosophy, was advocated by the Greek philosophy Plato.
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"You can't build a reputation on what you are going to do." -- Henry Ford, automaker
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CFTC
Commodities and Futures Trading Commission (US)
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