Basic Economic Concepts
The study of economics exists because all resources are...
Scarce
Name the four economic systems
Command, market, mixed, traditional
What type of economic system does the US have?
Mixed
The law of supply states that as the price of a good increases the ___________ _______________ ____________
quantity supplied increases
Scarcity means that society has limited resources but unlimited...
wants
A small mountain village grows crops the same way their ancestors did centuries ago. Families trade corn for wool or fish for clay pots, and most people do the same work their parents did before them. No one uses money, and decisions about who produces what are based on tradition.
Traditional
This is the concept that refers to you seeking your goals / what is best for you
Self-interest
The law of demand states that as the price of a good increases the ___________ _______________ ____________
quantity demanded decreases
What are the 3 economic questions?
What to produce?
How to produce?
For whom to produce?
In one country, the government decides how much bread will be baked, how many cars will be made, and what jobs citizens will do. Factories follow government quotas, and people are assigned roles to make sure every need is met, according to a central plan.
Command
This term explains why price and quality exist in our economy even without governmental control
Competition
If your income increases, and you buy more of a good, it is a __________ good.
normal
This is the value of the next best alternative. Also referred to as your "opportunity lost."
Opportunity cost
On a busy street, shop owners compete to sell clothes, food, and electronics. Prices change depending on what customers are willing to pay, and businesses that can’t attract buyers close down. People choose freely what to buy, what to make, and what to sell.
Market
A farmer decides to grow strawberries because many people in town are willing to pay high prices for them. Without anyone telling him to, his choice helps satisfy local demand. Other farmers notice and also plant strawberries, which eventually lowers the price and makes strawberries affordable for more people.
Invisible Hand
If your income increases, and you buy less of a good, it is an __________ good.
inferior
What are the four things needed by any business to produce a good or service?
Land, labor, capital, entrepreneurship
In a large city, people shop at private grocery stores, but schools and hospitals are run by the government. Companies create new products for profit, but there are also laws to protect workers and provide safety nets for those in need.
Mixed
A toy company designs a popular new doll, but some parts are found to be unsafe for children. The government steps in and requires the company to change the design before selling more dolls, ensuring the toys meet safety standards to protect kids. This is an example of government ________
If the price of shoelaces increase, what will happen to the demand for shoes?
Demand will increase