Foundations of Economics
This is the study of how to best allocate resources among unlimited wants
What is economics?
This states that as prices rises, quantity demanded falls
What is the law of demand?
This type of economy has government planners decide what and how to produce
What is a command economy?
This type of product sees a small price change lead to a large change in demand
What is elastic?
A country has this type of advantage if it can produce more of a good using the same amount or resources
What is absolute advantage?
This causes a movement along the demand curve
What is a change in price?
This problem forces people and societies to make choices
What is scarcity?
This is the point where quantity supplied equals quantity demanded
What is equilibrium?
This type of economy relies on voluntary exchange between buyers and sellers
What is a market economy?
This condition is created when price is set above equilibrium
What is a surplus
A nation has this if it can produce a good at a lower opportunity cost than another nation
What is comparative advantage?
These are goods like peanut butter and jelly that are used together
What are complements?
These are the four factors of production
What are natural (land), human (labor), capital, and entrepreneurship?
This states that as prices rise, quantity supplied will also rise
What is the law of supply?
In a market economy, these are the people that take risks and combine resources to start businesses
What are entrepreneurs?
This type of product experiences little change to demand when prices are changed
What is inelastic?
Where is outside the curve?
This is what happens to demand for normal goods when consumer income rises
What is increases?
This is the value of the next best alternative forgone
What is opportunity cost?
These are two of the five supply determinants
What are cost of inputs, expectations, # of suppliers, conditions of production, and government tax/subsidies, (also prices of related goods)
This is the main goal of a business in a market economy
What is profit?
This condition is created when price is set below equilibrium
What is a shortage?
What is inside the curve?
This is what happens to the demand for a related good when the price of a substitute rises
What is increases?
This type of model shows the trade-off possibilities between producing two goods
What is a Production Possibilities Frontier (PPF)?
These are two of the demand determinants
What are income, # of buyers in the market, tastes/preferences, expectations, and prices of related goods
This type of economy is based on customs and traditions
What is a command economy?
Also known as ceteris paribus
What is "all else equal"
Who is Europe?
These can cause the entire demand curve to shift
What are non-price demand determinants?