Intro to Econ
The fundamental problem that economics seeks to address
Scarcity
The three main types of business organizations
Sole proprietorships, Partnerships, & Corporations
Draw a Production Possibilities Curve and label the following points: inefficient, efficient, and unattainable
Efficient point is on the curve. Inefficient is inside the curve. Unattainable outside the curve
Business is booming! Wages are increasing, unemployment is low, and people are spending. What part of the business cycle are we in?
Expansion
What are the four factors of production?
Land, labor, capital, entrepreneurship
The three basic questions we use to address scarcity
What to produce?
How to produce?
For whom to produce?
What happens when consumers demand more product than businesses can supply?
Shortage
Walrus sells a scoop of ice cream for $2. They run a sale on their anniversary selling scoops for $1. What happens?
Movement along the demand curve. No shift
Tax Refund Season! Woo! The government pays out refunds to people who overpaid taxes. In which component of GDP is this counted?
Not counted (Transfer payments)
This refers to the alternatives that are available whenever a choice is to be made.
trade-off
Economic system in which the government controls and sets prices
Command Economy
If the production of 3 more units of output increases our total cost from 100 to 121, the MC is ______.
MC = Change in Total Costs/Change in Quantity MC = 21/3
MC = 7
Due to a peanut shortage, the price of peanut butter skyrockets. What will happen to the demand curve for jelly? What happens?
Shift to the left (Costs/Prices of Related Goods)
What are three macroeconomic goals?
Promote Growth, Limit Unemployment, Keep Prices Stable (Limit Inflation)
The notion that competition and self-interest would act as an ________ _______ and guide resources to their most productive uses and result in societal benefits.
Invisible Hand
A stapler to a teacher or a tractor to a farmer.
What is capital
What are the three main antitrust laws?
Sherman Antitrust Act, The Federal Trade Commission Act, The Clayton Antitrust Act
The government provides subsidies to firms involved in vaccine production. Consider the supply curve for COVID-19 vaccines. What happens?
Amazon is replacing workers in their warehouses with robots. What type of unemployment are the former employees of Amazon experiencing?
Structural Employment
For something to have value or monetary value, something must possess two qualities.
Scarcity and utility
The length of time that distinguishes a durable good from an nondurable good.
3 years of use on a regular basis.
The demand curve is downward sloping for three reasons. What are they?
Law of Diminishing Marginal Utility, Income Effect, & Substitution Effect
The price of bicycles increases due to a shift in consumer preferences. Consider the supply curve for bicycles. What happens
Quantity supplied goes up. Movement along the curve (change in price)
GDP is low and unemployment is high. What should Congress (fiscal policy) do to stabilize our economy?
Increase government spending and decrease taxes
In the product market, who is selling and who is buying?
Firms - Selling
Households - Buying