Five Foundations of Economics
The basic goal of economics.
What is addressing the scarcity problem?
Consequence of indirect incentives.
What are unintended consequences?
Increase in price causes a decrease in quantity demanded.
What is the Law of Demand?
Gross Domestic Product
What is the market value of all final goods and services produced in one year?
Unemployment caused by changes in the makeup of the economy
What is structural unemployment?
Makes your employees work harder.
What are positive incentive(s)?
One more Pepsi is worth it
What is marginal benefits > marginal costs?
Triggers movement along the demand curve
What is a change in price?
Average living standards in a nation
What is per capita GDP?
Takes time to find a match
What is frictional unemployment?
You can't have your cake and eat it, too.
What is a trade-off?
Creates value for all parties
What is voluntary trade?
You like Pepsi but the price of Coke decreases
What shifts the demand curve for Pepsi to the left?
Peaks and troughs
What is the business cycle?
Reduces hardship of job loss
What is unemployment insurance?
Patent and copyright laws
What is an incentive?
Joe produces bread at a lower opportunity cost than Bill
What is a comparative advantage?
The relationship between price and quantity supplied
What is the supply schedule or curve?
Y = C + I + G + NX
What is the equation for GDP?
Disappears when the economy is growing
What is cyclical unemployment?
Opportunity cost of going to the movies.
What is the highest valued alternative action?
Exchange with limited government interference
What is a market economy?
Price of wings are subsidized
What can cause the supply curve to shift to the right?
Makes nominal GDP become real GDP
What is the price level or GDP deflator?
Employed or actively seeking work
What is the labor force?