Chapter 1
Choosing one thing over another
trade-off
all the ways a nation or society uses limited resources to satisfy it's peoples unlimited wants and needs
Economic System
people who transform or change economic factors into goods and services
producers
USA can produce 12 fish in 10 hours
USA can produce 24 crab in 10 hours
What is the opportunity cost of producing 1 crab
.5 fish
to get the most out of your choices
maximize
How we measure the alternatives we choose not to do.
opportunity cost
the type of economy that remains the same across multiple generations
traditional (custom-based) economy
focusing on making a few goods or performing a few services rather than producing everything you need
specialization
USA can produce 60 fish or 120 crab
Canada can produce 40 fish or 20 crab
what are the extremes of their combined production possibility fronteir
100 fish
140 crab
a measure in economics for the usefulness of something to you
utility
What are the 4 factors of production
natural resources,
human resources,
capital resources,
entrepreneurship
economy where people decide how to produce, what to produce, with little intervention from government
Market Economy
having a relatively low opportunity cost with other producers
comparative advantage
for every 2 million dollars the US spends on civilian goods, it must give up 1 million dollars in military spending. what is the opportunity cost of spending 1 thousand dollars on civilian goods.
500 dollars for military
three basic questions to ask in an economy
what to produce
how to produce
for whom to produce
The economic dilemma that arises from having limited resources and unlimited wants and needs
Scarcity
economy where government has complete control
command (direct) economy
the ability of an individual or group to carry out a particular economic activity more efficiently than another individual or group.
Absolute advantage
if USA can produce 10 shells and 5 fish over 20 hours or 40 shells in 40 hours. How long does it take USA to produce a fish.
2 hours
objective views use _____ while subjective views use ______
a graph showing the different opportunities in producing two different goods or services given a certain amount of time
production possibilities frontier
nearly every country uses THIS economy to some degree.
Mixed economy
term used to describe nations relying on another for information, resources, goods, and services
interdependence
Country A can produce 10 tons of wheat or 20 tons of rice, while Country B can produce 5 tons of wheat or 15 tons of rice. Which country has the highest opportunity cost for producing 1 ton of wheat and what is the cost?
Country B - 3 tons of rice
using information helps you weigh the _____ and _____ of something
cost and benefits