Basic Concepts
Spending on tools and machinery that makes businesses more productive.
What is investment?
The one best option given up when you make a choice
What is Opportunity Cost
When one country is better at making a product than another.
What is Absolute Advantage?
Consumers want to buy as much as they can for as little money as possible.
What is the Law of Demand?
Dairy cows become more expensive to maintain. The supply of milk...
What is Decreases (shift left)?
Individuals, businesses, and governments have unlimited wants but limited resources.
What is scarcity?
When an economy operates inside the PPC/PPF.
What is Inefficiency or Underemployment?
The ability of an economy to produce a good at a lower opportunity cost than another country.
What is Comparative Advantage?
Producers want to produce as much as they can and sell it for as much money as they can.
What is the Law of Supply?
Steph Curry releases a new shoe. The shoe is considered ugly and is ruthlessly mocked on social media. The demand for the shoe...
What is Decreases (Shifts Left)?
All possible options that are given up when you make a choice?
What is a trade-off?
Any point outside the PPC/PPF
What is Unattainable?
United States: 500 bushels of corn Mexico: 400 bushels of corn Absolute Advantage.
What is the United States?
As price goes up, so does quantity.
What is Supply?
Supply shifts left and Demand shifts right.
What is Price Increases and Quantity is Indeterminate?
New Zealand is an example of what economic system.
What is a Free-Market economy?
This means that the more you have of something, the less utility [satisfaction] you get from each new unit.
What is Diminishing Marginal Utility?
United States: 100 cars 200 tomatoes France: 90 cars 100 tomatoes. This country has Comparative Advantage for Cars.
What is France?
Quantity Supplied is at 300 units. Quantity Demanded is at 200 Units.
What is Surplus?
Demand Shifts Left and Supply Shifts Left
What is Price is indeterminate and Quantity decreases?
What are payments made by the government to meet a specific goal rather than pay for goods (ex. welfare, social security)(individuals do not provide a service for these payments)
What are transfer payments?
As production of a product increases, the cost to produce an additional unit of that product increases as well.
What is The Law of Increasing Opportunity Costs?
Cuba: 40 sugar:10 cars
Mexico:50 sugar:100 cars
This country has Comparative Advantage for Sugar.
What is Cuba?
The point where quantity supplied and quantity demanded meet.
What is Equilibrium Quantity?
The supply of coffee increases at the same time as the demand for coffee decreases.
What is Price decreases and quantity is indeterminate?