Basics of Economics
What is the basic economic problem?
What is Scarcity
Referencing the graph drawn, what does Point A represent?
What is an inefficient use of resources
How is opportunity cost simply defined?
It's not what you gain, but what you lose
Who is a household?
People who work and buy products
What is absolute advantage?
Someone who can make more of a given item
What are the three big questions in Economics?
WHAT IS What to produce, How to produce it, Who to produce it for
Referencing the graph drawn, what does Point E represent?
Sarah is a college student and has two options on what to do with her evening.
Option A: Go to a party with her friends.
Option B: Stay home and study for her midterm.
If she chooses option A, what is her opportunity cost?
She loses out on studying and doing well on her midterm
What is a firm?
Business who make products and employ people
What is comparative advantage?
Someone who can make something at a lower opportunity cost
Define the difference between a 'good' and a 'service'.
Referencing the graph drawn, what does Point B represent?
What is a point of efficiency
If Sudjian can make 10 waffles or 5 pancakes in an hour, what is his opportunity cost if he decides to make 1 pancake?
What is 2 Waffles
What is a product market?
A place where goods and services are bought and sold
If the US can make 1,000,000 cars and Mexico can make 500,000 cars a year, who holds the absolute advantage?
What is the United States
How long should a 'Durable' Good last?
What is more than 3 years
Referencing the graph drawn, this graph appears to have what kind of opportunity cost?
Increasing
If Sudjian decides to take a new job working 12 hour shifts, what does he give up?
What do Firms contribute to the Resource Market?
If Sudjian can make 10 waffles or 5 pancakes, and Young can make 20 waffles or 4 pancakes, who holds the comparative advantage in making waffles?
Young (1/5 pancake)
What is the 'paradox of value?'
What is the high value of a nonessential item compared to the low value of an essential one
Referencing the graph drawn, what would be a reason that this curve could expand and grow larger?
What is technology, new resources, etc.
Sudjian has two choices:
1) Go to college for 4 years and take out $20,000 in loans, but then make $100,000 his first year out of college.
2) Start working and make $30,000 a year for 4 years.
Which option should he choose if all he cares about is how much money he will make after 4 years?
Start working, as he will make $120,000 compared to $80,000
What is the final entity that is apart of the Circular Flow that takes (taxes) money from Firms and Households and returns to them services.
What is the Government
Who is going to pass this weeks tests?
Me!