EE
Type of economy where people supply most of the goods and services they use
Traditional
What are the 3 produce questions?
What to produce?
How much to produce?
For whom to produce?
Land, materials, air, water are examples of what type of resource?
Natural Resource
Our tendency to continue with an endeavor we've invested money, effort, or time into—even if the current costs outweigh the benefits
Sunk Cost Fallacy
Arises when people feel the pressure to invest in an asset or a stock because they fear missing out on potential gains
FOMO (Fear of Missing out)
To trade goods you have but not currency. What kind of system is this?
Barter Sysytem
Disadvantages for Market Economy
Some people cannot afford prices and are left out of economy
Gap between rich and poor
Labor, intelligence, money, time are examples of what type of resource
Human Resource
The finding that people are more likely to place a higher value on an object they own rather than an object when they do not own it
Endowment Effect
Where a real or potential loss is perceived by individuals as psychologically or emotionally more severe than an equivalent gain
Loss Aversion
Type of economy where the government controls the factors of production
Command Economy
A mixed economy combines market and command systems
Mixed Economy
When supply is greater than demand
Surplus
Making a decision based in part on the behavior/advice of others
Herd Mentality
A tendency for people to quickly return to a relatively stationary level of happiness or “set point” despite experiencing major positive or negative events or life changes.
Hedonic Adaptation
Individuals make all economic decisions based on supply/demand
Market Economy
The choice that you make when faced with economic decisions where you have to choose one thing over another
Trade Off
Individuals make all economic decisions based on supply/demand
Market Economy
The benefit that you give up in to pursue an alternative
Opportunity Cost
The tendency to seek information that supports a person's beliefs.
Confirmation Bias
Advantages for Traditional Economy
Self-sufficient and do not rely on others
Economically successful if they meet their own needs
World changes and disasters have little effect on economy
What are the 4 Factors of Production?
Land, labor, capital, management
Advantages for Market Economy
Private citizens have a lot of economic freedom and choice
Price is determined by firms (often low)
Base prices on supply and demand
To overestimate one's ability to predict and control future outcomes is called what?
Overconfidence
Having limited resources and unlimited wants and needs of society in general
Scarcity