Basics of Econ
What is the definition of Economics?
The study of choice under conditions of scarcity.
PPF- Production Possibility Frontier
Curve that shows all combinations of 2 goods and services that can be produced given the resources and technology available.
The efficient outcome is not necessarily...
The equal outcome.
What is a price floor and what is an example?
A minimum price set on a market. Minimum wage
What is the relationship between price and Qd?
Inverse
What is the definition of scarcity?
Amount available is insufficient to satisfy the desire for it.
If there is a point inside, outside, or on the PPF curve is it...
Inside- Inefficient
Outside- Impossible
On the curve- Efficient
Three types of economic systems
Command, Market, Traditional
What is a price ceiling and what is an example?
A maximum price set on a market. Rent Control
What is the Law of Demand
As price rises (decreases), Qd decreases (increases) Ceteris peribus
What is opportunity cost? What is an example?
The second best option you give up for a choice you make. I could either go to work or take a nap. When I choose going to work, my opportunity cost is the utility I didn't get from the nap.
If there is economic growth, the PPF shifts?
If there is economic decline, the PPF shifts?
Growth- outward
Decline- Inward
Who participates in markets?
Households, Firms, Governments
What is a black market
A market for illegal goods or services
As price increases (decreases), quantity supply increases (decreases). Ceteris Peribus
What are the three fundamental economic questions?
What should we produce?
Who should we produce it for?
How should we produce it?
What is Pareto Efficiency?
There is no alternative allocation of a resource that can make some people better off without making others worse off
What are the four factors of production?
C-Capital
E-Entrepreneurship
L-Land
L-Labor
If there is a price floor set on a market, is producer or consumer surplus lost?
Consumer.
What moves you along the supply demand curve?
Price (deals with quantity demand and quantity supply)
What are the two sections of Economics?
Microeconomics
Macroeconomics
What is comparative advantage and specialization?
Comparative advantage-the lowest opportunity cost of producing a good.
Specialization-concentrating on a limited number of productive activities.
What are the answers for the three economic questions for each type of economy?
(DAILY DOUBLE)
Market- Firms choose what to produce, how to produce, markets (prices) determine who gets what product.
Command- The government chooses what to produce, how to produce, and who gets the products.
Traditional- Traditions determine what is produced, how it is produced, and who gets the product.
What causes a shortage and what causes a surplus?
Shortage- Price Ceiling
Surplus- Price Floor
What are the shifters of supply?
What are the shifters of demand?
(DAILY TRIPLE)
D-Tastes/Preferences
Income
Expectations
Prices of related goods
Population/# of consumers in market
S-Input costs
Technology
Expectations
Nature/weather
Prices of related goods and services
Number of firms in the market