Scarcity and the Factors of Production
The study of choices that an individual, a business, or a government has to make in dealing with the problem of scarcity
What is Economics?
What does the PPC model demonstrate? (two things!)
What is opportunity cost and efficient production? (the decision making process)
The first economic question.
What is What to Produce? (What to make, Who do you want to be when you grow up)
The market system that is based on customs, family needs and tradition. Example: Amish in the US
What is Traditional?
The names of the two sectors in the Two Sector circular flow model
What are Households and Businesses?
Unlimited Wants + Limited Resources =
What is Scarcity?
Where is 100% efficiency found on the PPC model?
At any point along the line! If you're on the line, you're fine!
The second economic question
What is How to produce/How much to produce? (How do I become the thing I want to be)
A market type where buyers and sellers are mostly free to do what they want with limited government involvement
What is Capitalism?
The name of the two Markets in the Circular Flow Model
What are the Product and Resource market?
The second best alternative, your number TWO choice. What you must directly give up to get your #1 choice
What is Opportunity Cost?
What is underutilization or waste?
The third economic question
A market type where the factors of production are owned by the government with little to no economic freedom
What is Communism?
In the circular flow model, the sector that owns the factors of production
Who are the Households? (the people own the LLCE)
The four factors of production or FOP otherwise known as Resources
What are the LLCE (Labor, Land, Capital & Entrepreneurship)
What is The Future or Production Possibilities Frontier?
When money is taken from people (taxes) and then given to someone for housing, food assistance or other social programs.
What is a Transfer Payment?
The fancy french term for the government keeping its "hands off" of the economy coined by the father of Capitalism
What is Laissez Faire (hands off, leave it be)?
The name of the Two flows in the Circular Flow Model?
The real flow (goods, services and resources) and the money flow (the payments given in exchange of real stuff)
When you sell your LLCE (Resources) this is the income received for each type of resource.
What are WRIP (Wages, Rent, Interest & Profit)?
The 3 ways to produce above the current PPC curve
What are 1) New Technology, 2) Additional Resources, 3) International Trade?
The six economic goals of the US economy (Name them all!)
What is "Freedom, Efficiency, Equity (Fairness), Growth, Security, Stability"
The Names of the two fathers of Capitalism and Communism
Who is Adam Smith (Capitalism) and Karl Marx (communism)
When drawing the circular flow model, this is the sector you should start with (hint: they own the resources!)
What are Households?