Smith
Identify what is necessary for the effective functioning of a market system.
A well-defined system of property rights
Define equity.
The concept of fairness or evenness as an economic objective.
Define efficiency
How well a system utilizes resources to produce goods and services, aiming to maximize output and minimize waste.
Explain what it means to say that a resource is free.
To say a resource is free means it is available without scarcity or cost, requiring no trade-offs or sacrifice of other goods to obtain or use it.
Define sustainability
Meeting present needs without compromising the ability of future generations to meet their own.
Explain how resources are more likely to be allocated in a free market economy.
In a free market economy, resources are allocated based on supply and demand, with individuals and firms acting in their own self-interest.
Explain the relationship between consumer goods and capital goods.
Consumer goods satisfy immediate wants, while capital goods (like machinery) are used to produce consumer goods
List what are sold in the resource (factor) markets.
Land, Labor, Capital, & Entrepreneurship
Explain how a free good is different from a public good.
Although free goods, like public goods, are non-excludable and non-rivalrous, they are not provided by the government as public goods are.
That the production at that scenario is inefficient
Describe how damage to infrastructure affects the PPC
It will cause the PPC to shift inward, indicating that an economy is shrinking. This is likely because worse infrastructure makes it more difficult to produce and transport, thus limiting potential
Establish feudalism´s response to the three main economic questions
What: Agricultural focus & Manorial self-sufficiency
How: Serf Labor & Tradesmen - The Guilds
For Whom: For the King and his Vassals, based on fealty and homage
Identify what the factor payments are in a resource market.
Rent, Wages, Interest, & Dividends
Identify the assumptions of the Production Possibilities Curve.
Each economy produces only two goods.
The goods are produced using combinations of the available resources.
Factors of production are fixed.
All resources in the economy are fully employed.
Differentiate between opportunity cost and marginal cost in production
Opportunity cost is the value of the next-best alternative forgone when a choice is made to produce more of a product than another.
Marginal cost is the incremental/additional cost of producing one more unit of a product.
In the PPC, all MCs are OCs, but not all OCs are MCs.
Describe a reason why the production possibility curve (frontier) might shift outwards.
Any of the following positive externalities: Better education, better healthcare, tech innovation, infrastructure development, environmental conservation, war spoils, resource acquisition.
Draw a PPC graph on the board showing potential shrinkage.
The graph must have a title, labels, be scaled, and show two PPCs with an indicator pointing to the left between the lines.
Draw a PPC graph on the board showing actual growth.
The graph must have a title, labels, be scaled, and show a PPC with two points inside the frontier and an indicator (arrow) to the right between the two points of production.
Increasing OC will have a bowed-out shape, indicating that the resources are not perfectly adaptable to all types of production. In contrast, a constant OC will be a straight line, indicating that resources are interchangeable.
If the Opportunity Cost of producing 1,575 bales more of wheat is 315 cans of Monster, then what is the Marginal Cost
• 1,575 bales of wheat (BW) = 315 cans of Monster (CM)
• 1,575 BW / 1,575 BW = 315 CM / 1,575 BW
• 1 BW = 0.2 CM
See Slide 1
The opportunity cost of rice is 12,500 pencils
See Slide 3
The OC of each unit (or MC) of good A is 2 units of good B
See Slide 5
The OC of 16 scary masks is 20 model cars
See Slide 7
The OC of a scary mask (also the MC) is 1.25 model cars
See Slide 9
The OC of a plate of feijoada (MC in this case) is 1.5 bowls of cereal.