All Flashcards
What is scarcity?
Unlimited wants exceeding limited resources, forcing choices.
What is opportunity cost?
The value of the next best alternative forgone when making a choice.
Define factors of production.
Resources used to produce goods and services: land, labor, capital, entrepreneurship.
What is a free-market economy?
An economic system where decisions are made by individuals and businesses based on supply and demand.
What is a command economy?
An economic system where the government controls the economy and makes decisions.
What is a mixed economy?
An economic system combining free-market and command elements.
What is productive efficiency?
Producing goods at the lowest possible cost (on the PPC).
What is allocative efficiency?
Producing the mix of goods society desires most (optimal point on the PPC).
Define absolute advantage.
Being able to produce more of a good with the same resources.
Define comparative advantage.
Being able to produce a good at a lower opportunity cost.
What is marginal cost (MC)?
The cost of producing one more unit of a good or service.
What is marginal benefit (MB)?
The benefit of consuming one more unit of a good or service.
Define utility.
The satisfaction or happiness derived from consuming goods and services.
Define marginal utility.
The additional satisfaction gained from consuming one more unit of a good or service.
What is scarcity?
Unlimited wants but limited resources.
Define opportunity cost.
The value of the next best alternative foregone.
What is a Production Possibilities Curve (PPC)?
A graph showing maximum combinations of goods/services an economy can produce.
What is comparative advantage?
Ability to produce a good at a lower opportunity cost than competitors.
Define Demand.
The quantity of a good consumers are willing to buy.
What is Supply?
The quantity of a good producers are willing to offer.
Define Equilibrium.
The point where quantity supplied equals quantity demanded.
What is economics?
The study of how we allocate limited resources to satisfy unlimited wants and needs.
What is laissez-faire?
A system where markets allocate resources perfectly without intervention.
What are markets?
Places (physical or virtual) where buyers and sellers interact to exchange goods or services.
How does scarcity apply to time management?
Time is a limited resource, so we must make choices about how to allocate it.
How does opportunity cost apply to choosing between college and a job?
The opportunity cost of college is the income you could have earned from a job.
How does comparative advantage explain international trade?
Countries specialize in producing goods where they have a comparative advantage and trade with others.
How does increased demand for electric cars affect equilibrium?
Increased demand leads to a higher equilibrium price and quantity of electric cars.
How does scarcity affect a consumer's decision to buy a new phone?
Scarcity of income forces the consumer to consider the opportunity cost of buying the phone.
How does opportunity cost relate to government spending decisions?
Every government spending decision involves an opportunity cost of what else could have been funded.
How does comparative advantage influence career choices?
Individuals often pursue careers where they have a comparative advantage, maximizing their potential earnings.
How does supply and demand affect the price of concert tickets?
High demand and limited supply can drive up the price of concert tickets.
How does equilibrium relate to housing prices?
Equilibrium in the housing market determines the price and quantity of houses sold.
Explain how scarcity affects healthcare resource allocation.
Due to limited resources, healthcare systems must make choices about which treatments and services to provide.