Term
| What are the 3 basic economic questions? |
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Definition
| What, How , and For Whom to produce |
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Term
| Why do we ask these questions? |
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Definition
| Because we have unlimited wants and limited resources. We have to trade off decisions we make. |
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Term
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Definition
| Not having enough resources, money or labor to have everything we want. |
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Term
| How does a command economy answer the 3 basic questions? |
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Definition
| The gov't makes the decisions |
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Term
| How does a market economy answer the 3 basic questions? |
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Definition
| The business and consumers make the decisions |
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Term
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Definition
| The cost of your next best alternative |
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Term
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Definition
| The choice between the 2 markets |
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Term
| What are the 4 factors of reproduction? |
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Definition
| Resources, Capitol, Labor, and Ideas |
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Term
| Where are the factors bought and sold? |
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Definition
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Term
| Do factors of production count in the calculation of GDP? |
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Definition
| NO!!! We only count the finished goods |
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Term
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Definition
| Gross Domestic Product; all the products and services created in a year. |
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Term
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Definition
| Products+Services= Amount of GDP |
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Term
| What are the 4 sectors of ecnomic decisions makers? |
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Definition
| Business, Consumer, Foreign, and Government |
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Term
| What do consumers sell in the Factors Market? |
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Definition
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Term
| What do business sell in the products Market? |
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Definition
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Term
| is the government a comsumer or business? |
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Definition
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Term
| Which of the features of capitolism could we find in a Command Economy? |
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Definition
Market
Competition
Voluntary Exchange
Economic Freedom
Private Property
& Profit Motive |
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Term
| Give an ex. of Competition |
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Definition
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Term
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Definition
| The study of how we make decisions ina world were resources are limited |
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Term
| How do our wants differ from our needs? |
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Definition
| Needs are required for survival-Wants are things we would like to have |
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Term
| What are the questions a society must ask because of scarcity? |
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Definition
| A rational consumer would ask whether or not he or she can afford to buy am particular item or not |
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Term
| Because scarcity exists, we must make choices. Explain why this is so. |
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Definition
| We have to make choices because we do not have enough resources to produce all the things we would like to have |
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Term
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Definition
| Simplified representations of the real world that are used to explain how the economy works |
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Term
| On what do economists base their models? |
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Definition
| Economic models are based on assumptions,or things we take for granted as true |
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Term
| Why is the quality of an Economic Model no better than the assumptions on which the model is based? |
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Definition
| Because your assumptions may be incorrect from the start |
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Term
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Definition
| The extra or additional cost on additional unit of output |
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Term
| Define Cost Benefit Analysis |
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Definition
| When you compare the marginal costs and the marginal benefits of a decision |
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Term
| What must you take into account when making an economic decision? |
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Definition
| All the costs and all the benefits of an action |
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Term
| How do fixed costs differ from variable cost? |
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Definition
| Fixed costs are expences that are the same no matter how many units of a good are produced-Variable cost change with the # of products are produced |
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Term
| How do you calculate the total costs of a business? |
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Definition
| Add the fixed cost to the variale cost(FC+VC) |
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Term
| Waht is the purpose of a cost benefit analysis? |
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Definition
| they tell us to choose an action when the benefits are greater than the cost |
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