Economic Systems
Name the four main types of economies.
Command, Market, Mixed, Traditional
What are the four factors of production?
Land, Labor, Capital, Entrepreneurship
What does PPC stand for?
Production Possibilities Curve
Define “scarcity.”
Limited resources and unlimited wants
In the “Get a Job” simulation, what economic idea was shown?
The invisible hand (self-interest benefits society)
Which economy type relies on custom and tradition?
Traditional economy
What is the purpose of economics?
To study how people make choices with scarce resources
What does a point on the PPC curve represent?
Efficient use of resources
What is the difference between a shortage and scarcity?
Shortage = temporary; Scarcity = always exists
Define “incentive.”
A reason or reward that motivates behavior
Give one advantage and one disadvantage of a command economy.
Advantage: stable prices/equality;
Disadvantage: lack of innovation or freedom
Name the three basic economic questions.
What to produce, How to produce, For whom to produce
What causes the PPC to shift outward?
Economic growth or new technology
What is opportunity cost as defined in class?
Value (time, money, place) of what you give up
Define “self-interest.”
Acting for one’s own benefit
What economy does the U.S. have?
Mixed economy
Which factor of production includes machinery and tools?
Capital
What are the three givens of a PPC graph?
Fixed resources, fixed technology, full employment
What does “guns vs. butter” represent, and what graph showcases it?
The tradeoff between military and consumer goods; PPC
In “Survival Island,” what concept did your group demonstrate?
Scarcity and opportunity cost
In a market economy, who answers the three basic economic questions?
Consumers and producers (the market)
Who combines the other three factors to make goods and services?
Entrepreneurs
What does a point inside the curve represent?
Inefficiency or underuse of resources
What is the law of increasing costs?
The more you make of one thing, the more you give up of another (higher opportunity cost)
In the PPC activity, why didn’t your curve fit the model?
Real-world data and human error cause inefficiency