The lack of resources to produce enough goods to satisfy everyone's wants or needs
Factors of Production
Land, Labor, Capital, Entrepreneurship
Factor of Production--Ground and resources contained within
Factor of Production--Number of workers and skill set
Factor of Production--Goods used to produce something else(technology, equipment)
Factor of Production--How the other 3 factors are used together to create the final product
3 Economics Questions
What to produce, How to produce, For Whom to produce
Statements of fact without opinon
Statements disguised as opinions, look out for 'should'.
The cost of one action due to the giving up of another(ex: going to a football game instead of studying).
The cost of producing one more unit or good
Production Possibilities Frontier
A graph comparing the relative cost of producing one good by considering the opportunity cost of another.
The willingness and ability to buy specific quantities of a good at alternative prices in a given period of time, ceteris paribus
The ability and willingness to sell(produce) specific quantities of a good at alternative prices in a given time period, ceteris paribus
Law of Demand
a change in price will result in quantity demanded changing in the opposite direction
The point at which the demand and supply curves/lines cross; leads to no shortage of surplus and maximizes overall profits
Government imposed price maximum that cannot be crossed by suppliers(producers).
Government imposed price minimum that cannot be crossed by suppliers(producers)
The use of market prices and sales to signal desired outputs(or resource allocations)
An imperfection in the market mechanism(ex: price ceiling/floor) that prevents optimal outcomes
Costs(or benefits) of a market activity borne by a third party; the difference between the social and private costs(benefits) of a market activity
Effect of Externalities
The presence of externalities(taxes, tax rebates, ect) remove prices from being a valid measure of a good's societal value.
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