Basic Economic Ideas
Food, clothing, and shelter are examples of these.
What are needs?
Costs that stay the same no matter how many items are produced.
What are fixed costs?
An economic system where private citizens own most of the means of production.
What is a market economy (capitalism)?
Markets where goods and services are bought and sold.
What are product markets?
The desire, willingness, and ability to buy a good or service.
What is demand?
This occurs when resources are limited and we can’t produce everything we want.
Costs that increase as more goods are produced.
What are variable costs?
An economic system where the government makes major economic decisions.
What is a command economy?
Markets where labor, capital, and resources are bought and sold.
What are factor markets?
The satisfaction a consumer receives from a good or service.
What is utility?
The study of how people make decisions when resources are limited.
The cost of producing one additional unit of a good.
What is a marginal cost?
An economy that combines elements of market and command systems.
What is a mixed economy?
The struggle between buyers and sellers to get the best prices.
What is competition?
The rule that says as price goes down, quantity demanded goes up.
What is the law of demand?
The cost of the next best alternative you give up when making a decision.
What is opportunity cost?
The additional benefit gained from an action.
What is marginal benefit?
A system where traditions and customs guide economic decisions.
What is a traditional economy?
Breaking a job into smaller tasks done by different workers.
What is division of labor?
A table showing how much of a product consumers will buy at different prices.
What is a demand schedule?
Comparing the costs and benefits before making a decision.
What is cost-benefit analysis?
The formula for total cost.
What are fixed costs + variable costs?
The belief that the means of production should be owned by society as a whole.
What is socialism?
Producing goods efficiently by focusing on what you do best.
What is specialization?
The total demand for a product by all consumers in a market
What is market demand?