Unit 1: Think like an economist
Not enough to satisfy everyone's wants and needs
Scarcity
What is the law of demand and two shifters
Septic
What motivates one to be an entrepreneur?
Profit!
What are 2 types of unemployment?
Frictional, Seasonal, Structural, Cyclical
Free Market
What is the law of supply and two shifter
As price of an item increases, supply will increase
PNE
What is limited liability
When you assume all of the responsibility (Like in a sole proprietorship)
What is a recession
What is the difference between appreciation and depreciation
appreciation= increase in value (home)
depreciation = decrease in value (car)
What did Adam Smith believe makes capitalism work
Voluntary exchange/Invisible hand theory
Does a surplus occur when price is set above or below equilibrium?
Above
What is one advantage and disadvantage of a corporation as a type of business?
Limited liability/Loss of control
What percentage is a normal rate for unemployment and inflation? (Two answers)
2-3% inflation
4-5% unemployment
What does homeowners insurance protect against?
Property damage AND liability!
Command economy
Price Ceiling
What is one advantage and disadvantage of partnership as a type of business?
Shared resources and decision making
Sharing profit/possible conflict
What is the point of a trade agreement?
To encourage trade between two countries would lowers prices for both parties
Name 3 things that can determine your credit score
1. Credit history
2. Payment history
3. Mix of credit
4. Length of credit history
What will innovation lead to?
Increased efficiency
Product: Candy canes
Event: price of sugar increased
What happens and draw!
Supply shift left
What is one advantage and disadvantage of a Sole Proprietorship as a type of business?
Sole receiver of profit, can make all decisions
Unlimited liability
Why do nations specialize and trade?
Better products, lower prices
direct relationship
high risk=high possible reward
low risk=low reward