Scarcity
What is the role of an entrepreneur?
To combine factors of production to create a new g/s or add to an existing market
Name the four types of Economic systems
Trad., Free market, command, mixed
concept: GDP
Gross Domestic Product - the sum of all g/s value in a given year in the U.S.
PPC
Training or knowledge of the labor force you employ (can increase or decrease over time)
Human Capital
What are the factors of production
land, labor and capital
Concept: Laissez Faire
The government does not impede on the market and takes a "hands off" apprach
How does Eminent Domain work?
The gov't cannot take private land without consent and just compensation
Concept: Production Possibilities Frontier
The maximum possible output of the combination of production of two g/s or categories of g/s
What are the three economic questions
What should be produced? How should g/s be produced? Who consumes them?
Concept: Limited resources available to meet our unlimited needs and wants
Scarcity
Concept: The self regulating nature of a free market, where profit is a motivator and competition is the regulator
Invisible Hand
Concept: Patent and copyrights
protect the exclusive right to produce or sell for 20 years (includes intellectual property)
If a point is inside the PPC we call this:
Underutilization
Concept: Public Disclosure laws and provide an example
PDL are gov't mandated information that producers must provide for consumers, i.e. side effects for medicine
Describe the concept of OPPORTUNITY COST
The next most desirable alternative (trade off) to the decision you make
What are the goals of a command economy?
Elimination of socio-economic classes, equal distribution of wealth, security for the people
Describe safety net programs that exist in the United States
Welfare...
Unemployment...
Social Security...
If a point is outside the curve we call this:
unattainable
Concept: Guns or Butter
The Gov't deciding to devote their scarce resources to defense g/s or domestic g/s
The decision to add or subtract one unit (i.e. hire one more worker, or build one more house in a development)
Thinking at the Margin
Discuss the advantages and disadvantages of a Traditional Economy
A- sustainability, equity, little to no waste
D - Lack of innovation and growth, susceptible to nat. disasters, limited trade
List 3 (of the 5) basic principles of free enterprise and describe them
profit motive, open opportunity, legal equality, property rights, freedom to buy and sell
If we create 8 million ton of watermelon we can create 14 million pairs of shoes, but if we create 14 million ton of watermelon, we can only create 10 million pairs of shoes. What is our opportunity cost to create 14 million ton of watermelon?
4 million pair of shoes
The production possibilities graph is a curve rather than a straight line, due to:
The law of increasing costs