Economic Basics
These are things required for survival such as food, water, and shelter
What are needs?
Giving up one thing to gain another.
What is a trade-off
An economy where the government controls most economic decisions.
What is a Command Economy?
This curve shows the maximum combinations of two goods an economy can produce using all available resources efficiently.
What is Production Possibilities Frontier?
A country where businesses are privately owned, but the government regulates some industries is this type of economy.
What is a Mixed Economy?
The study of how people make choices about using limited resources.
What is Economics?
A decision-making process that compares additional costs and benefits.
What is Marginal Analysis?
An economy where individuals and businesses make most economic decisions
What is a Free Market Economy?
A point located on the PPF represents this situation.
What is an economy working in perfect efficiency?
Rival for customers, sales, and lower prices, which drives innovation and benefits consumers.
What is competition?
Desires that improve our quality of life/.
What are wants?
Something that encourages or discourages a certain action.
What is an Incentive?
An economy that combines elements of both government control and free markets.
What is a Mixed Economy?
A point located inside the PPF indicates this economic condition.
What is inefficient use of resources (or underutilization of resources)?
The direct trade of goods or services for other goods or services without using money
What is barter?
The basic problem every economy must address due to limited resources.
What is scarcity
A student considers studying for one more hour. They decide to do it because the benefit of a higher test score outweighs the cost of giving up free time. This is an example of this decision-making process.
What is Marginal Analysis?
An economy based on customs, traditions, and beliefs passed down through generations.
What is a Traditional Economy?
A point located beyond the PPF represents this situation.
What is currently unattainable production with existing resources and technology?
Marginal analysis requires economists, business owners, etc to compare
What is the additional benefits and extra costs of making a small, incremental change to an activity?
The resources used to produce goods and services, including land, labor, capital, and entrepreneurship.
Factors of Production?
The next best alternative you give up when making a choice
What is Opportunity Cost?
Provide and explain one pro and con of a command and free market economy.
Answers will vary
Moving along a PPF from producing more of one good to more of another demonstrates this concept.
What is opportunity cost?
A structured framework that societies use to manage resources, produce goods, and distribute services
What are Economic Systems?