Scarcity and Economic Thinking
This basic economic problem exists because human wants exceed the resources available to satisfy them.
What is scarcity?
This branch of economics studies the decisions of individual consumers and businesses.
What is microeconomics?
In this economic system, customs and long-standing practices largely determine economic decisions.
What is a traditional economy?
This shows the combinations of two goods or services a consumer can afford with limited income.
What is a budget constraint?
This curve shows the different combinations of two goods an economy can produce using its available resources and technology.
What is a Production Possibilities Frontier (PPF)?
As an economy moves along its PPF, producing more of one good requires sacrificing some of another. This is known as a ______.
What is a trade-off?
According to this law, consumers generally purchase a greater quantity of a product when its price falls.
What is the law of demand?
This occurs where quantity demanded equals quantity supplied.
What is market equilibrium?
This term describes what must be given up when an economic choice is made.
What is opportunity cost?
This branch examines economy-wide issues such as unemployment, inflation, and economic growth.
What is macroeconomics?
In this system, government makes many of the major decisions about what and how much will be produced.
What is a command economy?
A combination located outside a consumer's budget constraint has this characteristic.
What is unaffordable?
A point located directly on the PPF generally represents this type of efficiency.
What is productive efficiency?
A PPF is typically curved outward because resources are not equally suited to producing every good, creating this principle.
What is increasing opportunity cost?
According to this law, producers generally offer a greater quantity for sale when the product's price rises.
What is the law of supply?
If quantity demanded is 100 units while quantity supplied is only 70, the market has this condition.
What is a shortage?
A student chooses to study for an economics test instead of working a three-hour shift. The wages the student gives up are an example of this.
What is opportunity cost?
The total value of final goods and services produced within a country during a specific period is known by these three letters.
What is GDP?
Private individuals and businesses make most economic decisions in this type of economy.
What is a market economy?
If burgers cost $4 and drinks cost $2, the opportunity cost of purchasing one additional burger is this many drinks.
What are 2 drinks?
A point located inside the PPF suggests resources are unemployed or being used in this way.
What is inefficiently?
Country A can produce either 20 computers or 40 tablets. The opportunity cost of one computer is this many tablets.
What are 2 tablets?
Demand refers to the entire price-quantity relationship, while this term refers to the amount consumers purchase at one particular price.
What is quantity demanded?
If quantity supplied is 120 and quantity demanded is 80, the market has a surplus of this many units.
What are 40 units?
Economists use this Latin expression meaning “other things being equal” when examining the relationship between two variables.
What is ceteris paribus?
A newly manufactured car counts toward GDP, while the sale of this type of car generally does not represent current production.
What is a used car?
The United States and most modern economies fall into this category because they combine markets with government involvement.
What is a mixed economy?
A student has $60. Movie tickets cost $12 and meals cost $6. If the student purchases one additional movie ticket, this many meals must be sacrificed.
What are 2 meals?
A combination outside the current PPF has this status given existing resources and technology.
What is currently unattainable?
Country A gives up 2 shirts to produce one pair of shoes. Country B gives up 4 shirts. This country has the comparative advantage in shoes.
What is Country A?
If consumer income increases and restaurant meals are a normal good, the demand curve for restaurant meals will shift in this direction.
What is to the right?
A hurricane destroys a large portion of the orange crop. Supply decreases, causing equilibrium price to generally do this while equilibrium quantity falls.
What is increase?
Economics is fundamentally concerned with how individuals and societies make these because resources are limited.
What are choices (or decisions under scarcity)?
GDP can tell us about the size of economic production, but it does not directly measure this broader concept involving happiness, health, leisure, and quality of life.
What is well-being?
Improved transportation, communication, and technology have contributed to this increasing economic interconnectedness among countries.
What is globalization?
Two people with identical incomes and identical prices may choose different combinations along their budget constraints primarily because they have different versions of this.
What are preferences?
Better technology, additional capital, or an increase in productive resources can cause the entire PPF to move in this direction.
What is outward?
Comparative advantage is determined by having a lower measure of this—not necessarily by being able to produce the greatest quantity.
What is opportunity cost?
Coke and Pepsi are examples of this type of related good because consumers may switch from one to the other when relative prices change.
What are substitutes?
A government establishes a legal maximum rent below the equilibrium price. This policy is called this and will generally create a shortage.
What is a price ceiling?
FINAL JEOPARDY!
CURVES AND SHIFTS
A new technology allows an economy to produce more of both consumer goods and capital goods. At the same time, increased consumer income raises demand for new automobiles. Identify what happens to the economy's PPF and what happens to the demand curve for automobiles.
The PPF shifts outward, and the demand curve for automobiles shifts to the right (assuming automobiles are a normal good).