The Problem of Choice
This loss is what economists refer to as the second-best option given up when making a decision.
Opportunity cost
These are the resources, or inputs, used in production (4 answers)
Land, Labor, Capital, Entrepreneurship
"Healthcare should be free" is an example of this kind of economic statement.
Normative
These are the 5 facets that make up an economy.
Households, Firms, Government, Financial Institution, Foreign Entities
To simplify reality, economists use this to isolate the relationship between two variables while ignoring other complicating factors.
Ceteris Paribus
Explain how economists consider scarcity to be the basic economic problem
There are not enough resources to produce everything that is necessary to satisfy human beings' needs and wants.
This is the ability of firms to produce at the lowest possible cost.
Efficiency
"England's" unemployment rate reached a record high of 13% last quarter" is an example of this type of economic statement.
Positive
This is the theoretical model used to show interdependence between economic actors.
Circular Flow of Income
No private ownership of resources by people and firms is a disadvantage of this types of economy
Command economy
This refers to the competition of one person consuming something which limits another’s ability to use it (simultaneously)
Rivalry
This refers to the process of utilizing limited resources (e.g., land, labor, capital) among competing uses to meet unlimited human wants. It addresses the core economic problem of scarcity.
Allocation
Sunk Cost Fallacy
In the resource market, firms pay this to households for capital.
Interest
Economics is the social science characterized by this which focuses on how people rely on others to provide them with goods and services required for supporting their economic well-being.
Interdependence
Describe how opportunity costs arise
Opportunity costs arise because of scarce resources. Human wants and needs are unlimited, but since resources are scarce, all those wants and needs cannot be satisfied. Therefore, society must choose what to do with its resources. The opportunity cost of a choice is the forgone best alternative to the choice made.
This refers to sharing of the outputs of production.
Distribution
All economic analyses should consider these 3 points.
Efficiency, Equity, Sustainability.
These are the 3 types of injections.
Government spending, Financial Investment, & Exports
Explain why the United States is or isn't a free market economy.
The United States combines market-driven activity with significant government intervention, so it is a mixed market economy.
Identify the opportunity cost of a chef opening their own restaurant
The income earned by working at someone else's restaurant.
These are the differences between the free market economy and the command economy.
In a free market economy, the factors of production are privately owned and there is no government intervention on economic decisions. In a command economy, the state is the owner of the factors of production, there is no private property and every economic decision is centrally planned by the government.
Positive economic statements aim to be objective and fact-based, but their accuracy depends on data, assumptions, and context. They can be false if evidence contradicts them.
Assume the total value after leakages is $20 billion, and the total value after injections is $10 billion. Determine the size of the budget surplus/deficit.
The economy shrinks by $10 billion (deficit/recession)
Opportunity NYC is an example of a conditional cash transfer where tax dollars were used to redistribute income amongst the population. Explain if this is a leakage or an injection.
Neither. Since it redistributes the total income, there is no growth or shrinkage. Therefore, it can neither be considered a leakage or injection.
Analogy: Moving water from one end of a pool to the other isn’t adding or draining water—it’s just changing who can swim where.