Definitions
A lack of goods or services due to deminishing natural resources
What is scarcity?
An economy where decisions are made based on traditions and customs
What is a traditional economy?
You have two cars you could buy. One has extra leg room and gets 15miles/gallon. The other has less leg room but gets 30miles/gallon. This is an example of _________________________
What is Scarcity Forces Trade-offs?
What is a trade off?
An economy where decisions are made by a ruler or government
When weighing the pros and cons of a decision, you may use the __________________
What is cost versus benefits analysis?
The act of willingly trading one item or service for another
What is a voluntary exchange?
An economy where decisions are made by individuals who produce and consume goods and services
What is a (Free) Market economy?
People responded to incentives in predictable ways.
When someone can produce a good or service using fewer resources (or less money) than someone else
An economy where decisions are made by both a government and individuals
What is a Mixed economy?
Describes how the choices we make each day are about having a little more or a little less versus all or nothing.
What is the Thinking at the Margin Principle?
When someone can produce a good or service for a lower opportunity cost
What is an comparative advantage?
Maasai Tribe, Khoi-san people
What are examples of a traditional economy?
Focusing on what we do well and then trading with others allows us to have more and better choices
What is the Trade Makes People Better Off principle?