Scarcity
What is scarcity?
The limited availability of resources to meet unlimited wants.
What is opportunity cost?
The value of the next best alternative that is given up when making a choice.
Define supply.
The amount of a good or service that producers are willing to sell at different prices.
What is competition in economics?
The rivalry among sellers to attract customers while lowering costs.
What is an external benefit?
A positive effect experienced by third parties not directly involved in an economic transaction.
Define external cost.
A negative effect experienced by third parties not directly involved in an economic transaction.
Give an example of a scarce resource.
If you choose to spend your allowance on a video game instead of books, what is the opportunity cost?
The books
What is demand?
The quantity of a good or service that consumers are willing to purchase at different prices
Name a benefit of competition for consumers.
Lower prices and better quality products.
Give an example of an external benefit.
Education increases the overall knowledge in a community.
Provide an example of an external cost.
Answers will vary teacher will approve or deny the answer
Pollution from a factory affects the health of nearby residents.
How does scarcity affect prices?
When resources are scarce, prices typically increase.
How does opportunity cost influence decision-making?
It makes individuals consider what they are giving up when making choices.
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What happens to demand when prices increase?
Demand typically decreases.
How does competition affect businesses?
It encourages innovation and efficiency.
How do external benefits affect Government Policy?
Governments may subsidize activities that generate external benefits to encourage them.
How do external costs influence market outcomes?
hey can lead to overproduction of goods that generate negative externalities.
What is the relationship between scarcity and economic choice?
Scarcity forces people to make choices about how to allocate their limited resources.
Provide an example of opportunity cost in everyday life.
Answer will vary, teacher will approve or deny the answer
Choosing to study instead of going out with friends.
Explain the law of supply.
As the price of a good increases, the quantity supplied also increases.
What is an example of a competitive market?
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Why is it important to consider external benefits in economic decisions?
They can lead to underinvestment in beneficial activities if not accounted for.
What role do governments play in addressing external costs?
They can impose taxes or regulations to mitigate negative external effects.
Why is understanding scarcity important in economics?
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It helps us understand why we must make trade-offs in decision-making.
Why is opportunity cost important for businesses?
It helps businesses evaluate the profitability of different choices.
Teacher will approve some answers
What is market equilibrium?
The point where supply equals demand, and the market is balanced.
Describe how monopolies differ from competitive markets.
Monopolies have no competition and can set prices higher than in competitive markets.
What is a "positive externality"?
A benefit that affects someone who did not choose to incur that benefit.
Why is it important for businesses to consider external costs?
Ignoring external costs can harm their reputation and lead to legal issues.