Economic Systems
Economic system where roles are defined by the customs of elders and ancestors.
Traditional Economy
Regarded as the Father of Economics for his revolutionary idea that economic development was best fostered in an environment of free competition.
Adam Smith
something the motivates – play a huge role in demand.
Incentive
How does the change in quantity supplied change?
A Change in Price
describes the various amounts of a product that someone is willing and ABLE to buy over a range of possible prices at one point in time.
Demand
Liberal brand of Command Economies. Economic system in which government owns some factors of production and has a role in determining what and how goods are produced.
Socialism
What are the pillars of our free enterprise capitalist economy? (6 Modern Pillars)
Private Property
Price System
Market Competition
Entrepreneurship
Voluntary Exchange
Specialization
DOUBLE JEOPARDY:
Rule stating that more will be demanded at lower prices and less at higher prices; an _________ __________ between price and quantity demanded.
Inverse Relationship
Principle that more will be offered for sale at higher prices than at lower prices.
Law of Supply
"all other things being equal." In economics, it acts as a shorthand indication of the effect one economic variable has on another, provided all other variables remain the same.
Ceteris Paribus
Even though there are several kinds of economies, due to so much overlapping, there are more of what type of economies than any other kind?
Mixed Economies
When faced with several versions of the same product, consumers will choose the product with the lowest price. This is called?
Competition
What six factors can shift a demand curve?
Changes in Income, Consumer Expectations, Changes in Demographics, Change in Population, Consumer Tastes and Adver., Price of Related Goods
A Maximum price that can be legally charged for a good or service. The price ceiling is set BELOW equilibrium.
Price Ceiling
A minimum price, set by government, that must be paid for a good or service. This price is ABOVE the equilibrium price. The byproduct of this would be a surplus.
Price Floors
DOUBLE JEOPARDY:
The term/acronym that is used to describe the how socialist programs ultimately have a cost in the long-run for citizens within the country.
TINSTAAFL (There is no such thing as a free lunch)
Name two federal regulatory agencies and briefly describe their impact on our economy.
Food and Drug Administration (FDA)
Federal Trade Commission (FTC)
Federal Communications Commission (FCC)
Federal Aviation Administration (FAA)
Equal Employment Opportunity Commission (EEOC)
Environmental Protection Agency (EPA)
Occupational Safety and Health Administration (OSHA)
Consumer Product Safety Commission (CPSC)
Nuclear Regulatory Commission (NRC)
The four factors that affect elasticity.
Availability of Substitutes, Relative Importance, Necessities vs Luxuries, Change over Time
What are four factors that can cause a change in supply?
Cost of Resources, Productivity, Technology, Taxes, Subsidies, Government Regulations, Number of Sellers, Expectations
The utility of a good or service declines as more of it is consumed by an individual. In other words, commodities become less valuable as more of them are acquired.
Diminishing Marginal Utility
What are two ADVANTAGES and two DISADVANTAGES of a market economy?
Advantages:
Individual freedom for everyone
Able to adjust to change gradually
Lack of government interference
Decentralized decision making
Incredible variety of goods and services
High degree of consumer satisfaction
Disadvantages:
Rewards only productive resources , does not provide for people too young, too old, or too sick to work
Does not produce enough public goods such as defense, universal education, or healthcare
Workers and businesses face uncertainty as a result of competition and change
Eminent Domain
The Smith family charged $4.00 and hour and babysitter worked 55 hours per month at this price. They decided to increase the pay to $6.00, and the babysitter only worked 38 hours in a month's time. What is the percent elasticity of demand AND determine the elasticity.
0.618 = INELASTIC
Analyze the following situation and explain how elasticity of supply would affect producer decisions.
THE PRICE OF ORANGES INCREASES
Supply is relatively inelastic; an ORANGE grower could not increase the supply greatly in the short term.
Allows consumers and producers to decide what, when, and how they buy and sell without interference.
Voluntary Exchange