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Cards In This Set
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What is the definition of economics?
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A social science dealing with the allocation of scarce resources to meet unlimited wants.
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What are the four factors of production?
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Land, Labor, Capital, and Entrepreneurial Ability
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What is Capital (like in the Factors of Production)?
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Tools, equipment, and machinery used. It can be used multiple times and is not used up.
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What is the economic problem?
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People have scarce resources and unlimited wants.
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What is Opportunity Cost?
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It is the most important thing that you give up when a choice is made. It's the next best alternative, the second choice.
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What is a model?
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A simplification of reality.
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What is Ceteris Paribus?
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A latin term that means "all other things remaining constant"
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What are the three assumptions of the Production Possibilities Model?
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1) Only two goods in the economy
2) All resources are used up completely 3) Technology and Resources are fixed |
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What units do you use for Opportunity Cost?
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Always in terms of what good you are giving up.
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What is the Law of Increasing Cost?
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As the production of a good increases, the opportunity cost in terms of the other good given up will increase.
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What is the shape of a Production Possibilities Curve (PPC)?
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Bowed out, or concave to the origin.
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What does it mean when there is a point INSIDE of the PPC?
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It means that not all resources are being used efficiently.
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What are the three fundamental questions of economic systems?
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1) What good and services will be produced?
2) How will the goods and services be produced? 3) Who gets the goods and services? |
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What are the two shifts that lead to an increase in price?
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A decrease in supply, and an increase in demand.
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What kind of economic system do we have?
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Market Economy
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