Limited amounts of goods and services are available to
meet unlimited wants
100
What are the five economic goals of the United States?
Security, Freedom, Growth, Efficiency and Equity
100
What is an externality (spillover costs)?
An economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume.
100
What is demand?
The willingness and ability for the purchase of a good or service.
100
What is marginal costs?
The costs for an additional unit of output to be produced.
200
What are the factors of production?
Land, Labor, and Capital (Physical and Human)
200
What is one major difference between command and market economies?
command=government makes most of the economic decisions
market=individuals make most of the economic decisions
200
When the government passes legislation to limit the amount of carbon monoxide emissions from cars, they are trying to correct a _________ ___________.
market failure
200
What is price elasticity of demand?
The responsiveness of consumers to price changes.
200
What is marginal benefit?
The amount of benefit one receives with the addition of one unit.
300
Products used in the production of final goods.
Intermediate goods
300
What is an incentive?
The hope of reward or fear of penalty that encourages a person to behave in a certain way.
300
What is the best measure for the government to use in looking at the standard of living for a country?
GDP per capita
300
What is elastic demand?
The response of quantity demanded to a price change is greater than the percentage change in price.
300
What is marginal revenue?
The price charged for the product.
400
What is opportunity cost?
The alternative that is given up as a result of a choice is made.
400
What makes a traditional economy different from a command economy?
Traditional=customs and traditions are followed with little change
Command=government determines what change takes place
400
The efficient operational level for a public good is when __________.
marginal social benefits equal marginal social costs
400
What is inelastic demand?
The response of consumers quantity demanded is small in relation to the percentage change in price.
400
What is the relationship between marginal costs and marginal benefits?
Marginal benefits must outweigh marginal costs in order for the product to be produced as a public good.
500
What is a production possibilities curve used to represent?
It represents the possible combinations of two goods or services that can be provided.
500
Who makes the economic decisions in a traditional economy, command economy and a market economy?
traditional=custom and tradition
command-=government
market=individuals
500
When the government passes a law that enacts "affirmative action" it is most likley trying to ensure what economic goal?
Equity
500
How does the price for a substitute good affect the demand for the other good?
As the price changes for the substitute good changes, demand for the other good will move in the same direction.
500
What is the relationship between marginal revenue and marginal costs?
When marginal revenue equals marginal costs, a firm is maximizing its profit.