Models
Two primary uses for economic models.
Instruction and Production.
Law of Demand
If all other variables remain the same, if the rice of something goes down the interest for it increases
What causes a change in demand
Price changes, income changes, related goods.
Heart of the economy that circulates money
the financial market.
Biblical principle for being satisfied
Content
What is the PPC curve and what does it do.
Production Possibility curve, it shows maximum units of output.
The act of buying in economics is called what
demand
What are Inferior goods and an example
Goods where their demands increase as income decreases.
How does discouraging entrepreneurship affect the flow or new products.
No new products
Most important factor of production
entrepreneurship
What is the necessary function of of financial markets
firms take money from households who produce capital.
A drop in income would have the least effect on what type of goods?
Inferior goods, or goods with low elasticity (Bread)
What are Complementary Goods
What are Substitute Goods
List some examples.
Goods that values increase together Bacon and Eggs
Substitute Goods values increase and decrease opposite to the other. Beef and Chicken
Why is a graph better than a schedule?
it contains more data.
Billy bought a car, it gave him 25 Utils, if billy buys a second car how many utils will that one give him
less
The circular flow model is used in macro or micro economics?
Macroeconomics
What is the concept of crowding out.
The process of the government being too involved with borrowing the limited available money pushing industries out
What is marginal utility,
the more you have of something the less you want it.
What is elasticity
Demands of goods with low elasticity, rarely change as as price rises and falls
What are the 4 factor costs and define
Rent
Wages
Interests
Profit
What are the four main concepts in the circular flow model
1. Households,
2. business firms,
3. government,
4. financial markets.
What do prices do?
Provide incentives
transmitting information
redistributing income
Increased consumption of chocolate.
A shift to the left on the demand curve means what.
A drop in demand.
What are the four factors of production and examples
Land
Labor
Capital
Entrepreneurship