Markets
PPCs
Decisions
Vocab
Random
100
What is 1 positive of free enterprise?
Competition creates innovation
Competition leads to more choices and price points
Production meets demand
100
What is the definition of a production possibility curve?
Graph that shows all possible combos of 2 goods when resources are used efficiently
100
In marginal analysis, when should you stop making additional choices?
When marginal benefits are less than marginal costs
100
What are the 4 factors of production?
Land
Labor
Capital
Entrepreneurship
100
What are the 3 economic questions?
What to make?
How to make it?
Who is it made for?
200
What is the system where markets determine prices?
Free enterprise
200
What do the points on the PPC represent?
Possible combos of goods
200
What is the process of cost-benefit analysis?
Comparing the pros and cons of a decision to determine which to make
200
Goods that are long lasting are called…
Durable goods
200
What is 1 positive and 1 negative of command economies?
300
What is a command economy?
Economic policies controlled by the government
300
What do the points above the curve represent?
Combos that cannot exist because it uses too many resources
300
The value of what you give up, or your next best choice, is known as…
Opportunity cost
300
The study of how people make decisions based on the use of scarce resources is called..
Economics
300
What is scarcity? How is it different from shortage?
Scarcity- natural limit to meet unlimited demand
Shortage- delayed supply of item because too much demand
400
The idea that businesses are driven by the thought of making money is called…
Profit motive
400
How is opportunity cost shown in the PPC?
Looking at the points on the curve— moving from one combo to another to see what is gained and lost
400
What is 1 benefit of using CB analysis and what is 1 negative?
Pros
Data driven to help take away biases and create a “more logical” decision
Uncovers hidden costs and benefits through listing all options
Cons
Difficult to predict all variables (present value of dollar, interest rate, inflation, cash flow)
Removes human element to decision making— doesn’t account for morality
More difficult to make accurate predictions for long term/large scale choices
400
What economic rule says that the more you do an activity, the less satisfaction you get?
Law of diminishing utility
400
Which factor of production includes man made items?
Capital
500
What are 2 examples of the US being a mixed economy?
Command: taxes, gov rules for businesses, control wages sometimes
Free enterprise: competition, choices, private property
500
What is specialization and how do PPCs support the idea?
Specialization- focusing production on something you create efficiently
PPCs help determine which products countries should specialize in and which should be traded
500
What is an implicit cost?
Cost that is hard to give value to (family time, how you spend your time, etc.)
500
What is the difference between macroeconomics and microeconomics?
Macro- large scale economics (nation)
Micro- individual and families
500
Who answers the 3 economic questions for a command economy? Who answers them for a free enterprise?
Command: government
Free enterprise: people/business/supply and demand