Economics Systems
What are the three basic economic questions?
What to produce?
How to produce?
For whom to produce?
What does GDP stand for?
Gross Domestic Product
If demand increases and supply stays the same, what happens to price?
Price goes up.
What is opportunity cost?
The next best choice you give up.
What is a public good?
A good that everyone can use and no one can be excluded from.
In which economic system does the government make most decisions?
Command economy
What is GDP per capita?
GDP divided by population (average per person).
If supply increases and demand stays the same, what happens to price?
Price goes down.
If you study instead of working, what is your opportunity cost?
The money you could have earned.
Give one example of a public good.
Roads, police, fire department, public parks.
In which economic system do individuals and businesses make most decisions?
Market economy
Why can a country have high GDP but low GDP per capita?
Because it has a large population.
What is demand?
The amount consumers are willing and able to buy.
Why is opportunity cost important?
Because resources are limited.
Why does the government provide public goods?
Because private businesses may not provide them.
What type of economy does the United States have?
Mixed economy
Which shows living standards better: total GDP or GDP per capita?
GDP per capita
What is supply?
The amount producers are willing and able to sell.
Is opportunity cost only about money?
No, it can include time and other choices.
What is an example of a positive externality?
Education (benefits everyone).
Why do most countries use a mixed economy?
Because it combines free markets with government support and protection.
What does GDP measure?
The total value of goods and services produced in a country.
What happens at equilibrium?
Supply equals demand.
Give an example of opportunity cost in government spending.
If the government spends money on the military, it cannot spend that money on schools.
What is an example of a negative externality?
Pollution.