Economic Principles
What is economics?
The study of how decisions are made when resources are limited.
Buyers, as a group, determine the _____ and Sellers, as a group, determine the _____
Demand and supply
What is a market?
Anu structure that allows buyers & sellers to exchange any type of goods, services, and info.
Explain the difference between micro and macroeconomics.
Micro focuses more on decisions made by individuals/firms and the consequences of the decisions while macro focuses on the whole behavior of the economy.
What is the business cycle?
It allows people to understand the direction the economy (GDP) is going (expand or shrink) and helps them to plan accordingly.
What questions does scarcity cause us to answer?
What to produce, how to produce, and who should we produce for.
What is the law of supply?
As the price rises, the quantity supplied rises.
The products are slightly different.
Yes
What is Gross Domestic Product (GDP)?
The total value, in dollars, of all final goods and services produced within the nation each year.
Sara chose to go to the skating rink with her friends rather than spending that time to do her schoolwork. What is this an example of?
Opportunity cost
What is the law of demand?
As the price rises, the quantity demand falls.
What are the 4 types of competition?
Pure Competition (Perfect Comp)
(Imperfect Comp)
Monopolistic
Oligopoly
Monopoly
Uses changes in government spending and taxes to affect overall spending.
What's the difference between a recession and depression?
Recession is a contraction for over 6 months. Depression is a recession of more than a year.
What is the formula to find total cost?
Fixed Costs + Variable Costs = Total Cost
Difference between elastic & inelastic?
When a demand for a good is elastic, a price increase = lower total revenue. When a demand for a good is inelastic, a price increase = higher total revenue bc people need that product.
Pick Any 3 Different Monopolies.
Natural Monopoly
Government Monopoly
Technological Monopoly
Antitrust Exemption Monopoly
Geographic Monopoly
What is the monetary polocy?
Uses changes in the quantity of money to alter interest rates and affect overall spending.
What can cause the cycle to contact?
Reaching the peak phase.
What is the fine difference between Trade-off and Opportunity Costs?
A trade off is making a decision of choosing one thing over another when choosing between items. Opportunity Cost is when you choose to do something and lose the ability to do something else with your time or money.
Surplus, Equilibrium, and Shortage means?
Qd<Qs Surplus- quantity demanded is less than quantity supplied
Qd=Qs Equilibrium- quantity demanded is equal to quantity supplied
Qd>Qs Shortage- Quantity demanded is greater than quantity supplied
Explain the 4 types of competition.
Pure Comp- Large # of buyers & sellers + an identical product (usually grown or raised on a farm.
Monopolistic Comp- Lots of buyers & sellers but the products are slightly different. (Chicken nuggets vs Sauced nuggets)
Oligopoly Comp- few very large sellers dominate the industry and some formally agree to set prices (At&T, Verizon, T-Mobile)
Monopoly- Only one seller of a particular product (Amazon, Walmart, Microsoft)
When does the economy have price stability, inflation, and deflation?
Price stability is when the aggregate price level changes only slowly. Inflation is the aggregate price level rises. Deflation is when the aggregate price level falls.
Expansion (growing) , Peak (top) , Contraction (shrinking) , Trough (bottom)