Choices & Resources
The value of the next-best alternative given up when a choice is made.
Opportunity Cost
Customs and habits answer the basic economic questions in this system.
Traditional economy
If the price of a product rises, this usually happens to its quantity demanded.
Decreases
The law stating that producers usually offer more for sale at higher prices.
Law of Supply
The total market value of final goods and services produced within a country during one year.
GDP (GROSS DOMESTIC PRODUCT)
Water, Timber, Oil and Land belong to this factor of production.
Natural Resources
Central planners make most major production decisions in this system.
Command Economy
A sneaker price falls from $100 to $70. Give the correct notation.
(P DOWN, QD UP)
The market condition in which quantity demanded exceeds quantity supplied.
Shortage
A used car sold this year is excluded from GDP for this reason.
It was counted when it was originally produced
A food truck uses a grill, a cook, and propane to make food. Identify each one as capital, labor, or a natural resource.
Grill = capital
Cook = labor
Propane = natural resource
Buyers and sellers acting in self-interest guide production in this system.
Market economy
A concert ticket price rises and quantity demanded falls. Give the correct notation.
(P UP, QD DOWN)
The market condition in which quantity supplied exceeds quantity demanded.
Surplus
Flour bought by a bakery is excluded separately from GDP because it is this type of good.
Intermediate good
A student can work, study, or attend a game. The student chooses the game. What is the value of the best option the student gave up?
Opportunity Cost
This system combines private markets with government regulation and public services.
Mixed economy
Pepsi and Coke have this relationship because one can replace the other.
The price at which quantity supplied equals quantity demanded.
Equilibrium price
The freedom of businesses to compete for profit with limited government interference.
Free enterprise
An unrecoverable past expense that should not control a current decision.
Sunk Cost
Name one country commonly used as an example of a command economy.
North Korea (Strong answer)
Cuba
A small increase in price causes a large drop in quantity demanded. Demand has this type of elasticity.
Elastic
A new technology lowers production costs. This usually happens to supply.
Supply increase
Consumers influence what firms produce through their purchases.
Consumer sovereignty