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economic 1st study guide
Terms in this set (34)
Describe the problem of economic scarcity ?
The basic economic problem facing all societies is scarcity.
Identify and describe methods for allocating scarce resources
Price-supply and demand determines a market price ,whoever can afford to buy something and get it
Authority-a law saying you have to pay income taxes or in a command economy the gov decides what to produce and for whom it will be produced .
Force-a military draft.
Lottery- also during a military draft.
First come ,First served-Standing in line.
Majority Rule - voting to determine if land will be public or private.
Personal Characteristic - "whites only" restaurants during segregation.
Define opportunity cost
is the value of ones next best alternative given up when a choice is made
Identify the 4 factors of production and identify what each one means ?
capital-are human made resources used to make products or deliver services.
Entrepreneurship- starts business & manages a business
Land-also known as natural resources , this refers to anything provided by nature that can help business
Labor-known as human resources the process of making things requires labor of human workers
what are the 4 major motivations for entrepreneurs to take risk ?which one is the biggest motivator?
The 4 major motivations for entrepreneurs take risks profit , job creation ,innovation and improving society , The biggest motivator is profit.
in economics, rational decicsion occur when?
Rational decision occur when a choice in which the marginal benefits of a decision are greater than (or at least equal to ) the marginal cost.
BE ABLE TO READ A PRODUCTION POSSIBILITIES CHART CURVE
BE ABLE TO DETERMINE MARGINAL BENEFITS ,MARGINAL COSTS AND RATINAL DECISIONS ON A CHART
is the focus of a worker on only one or few aspects of production in order to improve efficiency.
what is the relationship between specialization and voluntary exchange ?
specialization leads to the need for voluntary exhange
When two people engage in trade ,both sides will benefit if the trade meets which two requirements ?
Voluntary and Non-fraudulent
what is division of labor ?
car companies specialize in making cars inside the car factory there is another kind of specialization that increases productivity called division of labor.
an assembly line can increase a factory's productivity because it allows workers to..
Each worker does a small part of the job & the product rolls down.
Specialization causes what two things to increase ?
Productivity and efficiency
What are the 3 basic questions asked of an economy ? Explain them.
What should we produce?-what things should we make and how many of each thing should we make.
How should we produce ?-should we invest in the latest technology ? should we allow one large company to make something or should we allow money smaller companies to complete.
For whom should we produce it ?should we make things only the wealthy can afford or should we focus on everyday items.
list and describe the 8 broad economic goals
Freedom- people can make their own choices
efficiency - lack of waste ,potential is maximize
growth-increase in available goods and services
sustainability -maintaining growth in the long run.
security - predictable source of income for people etc.
price stability -low inflation
equity-fairness , equal distribution of wealth
full employment- everyone who is willing & able to work can get a job.
which type of economic system is most likley to experince high amount of government regulation and low amounts of private ownership?
The main reason that modern command economies have failed is ?
This system did not work is because one decision making group cannot possibly figure out how to plan every detail of complex economy .it led to shortages and efficiency .
What are other disadvantages of command economies?
they cannot respond quickly to changing needs and conditions they provide no incentives to work hard and be efficient because wages are not based on workers performance and producers cannot earn a profit .
command economies are better suited to meet which economies goals?
Security , price stability , equity , and full employment
competiton and free enterprise are most common in which type of economic system?
what are the advantages of market economies?
they are very efficient and competive
what are the weaknesses of market economies?
they cannot guarantee price stability or equity .
copyrights ,trademarks , and patents are all ways governments try to serve which role ?
to provide a stable supply of money
describe the government role of providing public goods?
providing goods and services to taxpayers and even non-taxpayers
what role the government fulfilling when they increase unemployement benefits ,implement more welfare programs and rearrange tax brackets?
most nations provide social safety net
which type government interventions promote market competition?
Explain examples the government trying to correct market failures (there a couples of these in the notes )
making companies reduce pollution breaking up monopolies & addressing shortages or surpluses.
reducing laws and rules businesses have to follow is an example of...
explain who benefits from regulation and deregulation.
consumers and producers
government agencies inspect restaurants on a regular basis to insure the restaurants are obeying health and food safety regulations ,what economic effects does this have on the restaurants ?
they have to change more for their food to cover these costs
is the amount of outputs (products)is greater than the inputs of resources
economic growth is often tied to investment in machinery , new technology and education of the population. this is because.
the standard of living
to achieve economic growth a society must ..
when society is able to produce more of the things that people wanted improve it's member standard of living .
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