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ECON SEMESTER 2 FINAL: Part I
QUIZLETS FOR RELATIONSHIPS: DEMAND-https://quizlet.com/_212qhd SUPPLY-https://quizlet.com/_23dve7 Don't forget to look over charts and graphs, including reading a STOCK TABLE
Terms in this set (55)
social science that deals with how a society allocates its scarce resources to meet its unlimited wants and needs
process of choosing which needs to meet how much resources to use
sacrifice/gain in making decisions in how to use resources (beyond opp cost/opp benefit)
wants and needs unlimited while resources are limited
desire but not necessary
necessary for survival
action or activity one performs for another
examine choices and behaviors of individual concerning one product, firm, or industry
examines the behavior of the WHOLE economy/group
(what ya lost) value of the next most desirable alternative given up as a result of your choice
(what ya get) value of what is gained
"guns or butter"
phrase used to describe societal trade off, military or civilian
production possibilities graph (PPG)
a graph showing the various ways a society, firm, or individual uses resources
"all or nothing"
2 points on a PPG where the frontier crosses the 2 axes
"thinking at the margin"
movement along the frontier line
production possibilities frontier
line connecting all possible combinations
effort devoted to a task
human resources used to produce other goods and services
uses more labor than machines
use more machines than labor
three basic economic questions
1. what goods/services to produce?
2. how will goods/services be produced?
3. for whom will goods/services be produced?
Two types of goods/services produced?
society- "guns or butter"
business- interaction between buyers/sellers and resources available
how will goods/services be produced?
A. land-natural resources
B. labor-effort devoted to a task (paid)
C. capital-human resources used to produce other goods/services
Factors of Production
labor vs. capital
labor intensive-more labor than machines
capital intensive-more machines than labor
division of labor
For whom will goods/services be produced?
Consumers and Prices;
Consumer preferences and spending habits
economic systems (definition)
the combination of social & individual decision making a society uses to answer 3 economic questions
Four Economic Systems
how are the three economic questions answered in a traditional economy?
custom, ritual, and habit
how are the three economic questions answered in a command economy?
government dictates land and labor
how are the three economic questions answered in a market economy?
individual consumers and producers in the market arena
how are the three economic questions answered in a mixed economy?
market decisions with government order
central to traditional economy
main labor activities of a traditional economy
agriculture, hunting & gathering
organization that produces and sells
struggle among firms for your $
concentration of productive efforts in a small number of activities
firm to household
one's personal gain
person/group in the same residence
household to firm
expectation, good or bad, that results in desired behavior
limited government involvement
shift of PPG to the right
shift of PPG to the left
any point on the frontier
any point below the frontier
any point above the frontier
circular flow chart: market economy
*money always goes on the outside
circular flow chart: mixed economy
*money always goes on the outside
players: household, government, firm
remember to include taxes, government purchases, government FOP,
Recommended textbook explanations
Economics: New Ways of Thinking
Roger A. Arnold
Principles of Economics
N. Gregory Mankiw
Economics: Principles in Action
Arthur O'Sullivan, Steven M. Sheffrin
William A. McEachern
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