Economic Principles
"unlimited wants, limited resources" describes the vocab word..
scarcity
What are inputs?
Land, labor, and capital (and entrepreneurship)
In a command economy, who commands that economy (makes decisions for the economy)?
The government/ruler/authority
What does it mean if you specialize in something?
You develop a skill for one thin
You become an expert in a specific activity
(Example: Ms. M specializes in teaching social science, not ALL the subjects)
Pineapple or potato?
Potato!
When there is scarcity, we are forced to make...
choices
shortages are __________, scarcity is _________
shortages are temporary, scarcity is forever
Who decides what in a market economy?
Individual producers (sellers) and consumers (buyers)
The way buyers and sellers exchange goods and services
Delegating tasks to different people who may specialize in that task is an example of...
division of labor
Why did Ms. Mischin mess up when she said that a building was land? (land, labor, capital)
Land is only natural resources (water, wood, energy)
A building is an example of capital
What is a "market"?
Any arrangement that brings buyers and sellers together to do business
What is utility?
Satisfaction or pleasure you get from consuming a good/service
(utility = deliciousness from a cookie)
How do mixed economies divide the decision making?
Between government and individuals
What is economic interdependence?
What song did Ms. Mischin play to show how scarcity impacts our choices/decisions
"You Can't Always Get What You Want" by the Rolling Stones
What does "margin" mean in "thinking at the margin"?
The outer edge/border of something
a little more or little less
one extra unit of a good
How is a tradeoff different from opportunity cost?
tradeoff: giving up one thing for another
opportunity cost: the VALUE of the second-best alternative you gave up
What are the 3 fundamental economic questions societies use to determine who gets what?
What will be produced
How will it be produced
For whom will it be produced
What is an absolute advantage?
You can produce a good/service using fewer resources than someone else
Example: (resource = time). I can run more laps than Simon in 10 minutes
What is a market?
Any arrangement that brings buyers and sellers together to do business with each other.
What is economics all about?
The study of how people use their limited resources to satisfy their unlimited wants
What does it mean when a Production Possibilities Curve shifts to the LEFT?
The economy is shrinking
Less goods are being produced
There are less resources available
A natural disaster occurred
"Equal opportunity, profit motive, property rights, limited government, economic freedom, competition, and binding contracts" are all examples of America's ________ __________ __________.
Free enterprise system
What is a comparative advantage?
When you can produce a good/service at a lower opportunity cost than someone else
Eating too much pizza to the point where you get sick is an example of the Law of _________ _________.
The Law of Diminishing Utility or negative utility