Vocab 1
not having enough resources to satisfy all one's needs and wants
scarcity
the loss of the next-best option when choosing to do one thing or another
opportunity cost
What is the basic economic problem faced by people and nations alike?
scarcity
What is the formula for calculating benefit-cost ratio?
BCR=Benefit/Cost
Surplus - More supply than demand
Shortage - More demand than supply
the amount of a good or service that producers are willing and able to sell over a range of prices
supply
the amount of a good or service that consumers are willing and able to buy over a range of prices
demand
What are the three basic economic questions?
What to produce
How to produce
For whom to produce
Perform the following benefit cost analysis:
Joe's Seafood Shack wants to buy a faster delivery van for $40,000. It will save the business $30,000 in fas and time over it's lifespan.
Calculate the benefit-cost ratio. Is this benefit worth the cost?
0.75. No
Study the chart for Demand and Supply for Oil. What is the equilibrium price of oil according to the graph.
$30
an economy in which businesses and individuals make the major economic decisions but in which the government also plays a role
mixed market economy
giving up one option in order to get something of greater value
trade-off
Identify at least three examples of a natural resource
examples may include lumber, air, soil, land, fossil fuels, iron, etc
Perform a benefit-cost analysis based on the following scenario.
A landscaping company wants to reduce their fuel expenses and noise complaints.
Option A: Replace all gas mowers with electric mowers
Cost: $5000
Benefit: (gas savings + new "quiet" contracts): $9000
Option B: Install GPS tracking on all current trucks to optimize driving routes.
Cost: $2000
Benefit (fuel savings + more jobs per day): $3800
Calculate the benefit-cost ratio for both options, then determine which is the better option.
Option A: 1.8
Option B: 1.9
Option B is better
Explain how increased competition affects prices and why.
As more competitors enter the market, they will lower their prices to attract the most customers.
a comparison of the costs and benefits of a decision
benefit-cost analysis
an economic system in which the government makes the major economic decisions
command economy
What determines the kind of economy a nation has?
How the nation answers the three economic questions
Study the chart. If Joe's Seafood Shack stays open for five extra hours, how much revenue will he make in the fifth hour? Should he stay open that long?
$30; no he should not
Study the chart (see charts). How does an increase in the price of oil affect the supply of oil?
As the price increases, so does the supply.
the study of how people use limited resources to satisfy unlimited wants
economics
the price set for a good or service in the marketplace at which demand and supply are balanced
equilibrium price
How are economics and scarcity related?
Why would the cost of labor and supplies go up if Joe's Seafood Shack stays open longer?
He would need to pay employees for working more hours; because he is open longer, he is using more supplies
Study the charts (see charts). What happens to the demand for oil as the price rises?
As the price increases per barrel, the demand decreases.