econ retest

What is the difference between shortage and scarcity?

Shortage is temporary scarcity is permanent

labor

labor is the amount of physical, mental and social effort used to produce goods and services in an economy

what is meant by the term laissez faire?

the government cannot interfer

Define specialization

the process of concentrating and becoming expert in that department of skill

Explain the free lunch principle

Another name for scarcity forces tradeoffs, even if someone buys you lunch, there are some tradeoffs, you may lose time, you may own them something.

What is the difference between perpetual resources, renewable resources, and non renewable resources? give examples

Renewable resources: Earth can renew it quickly Non-Renewable Resources: Earth can renew but it takes billions and billions of years. Perpetual Resources: Renewed almost infinitely and lasts long

productivity

economic measure of output per input or output

What is the difference between Macroeconomics and Microeconomics?

microeconomics deals with the choices made by individual units, while macroeconomics deals with large scale economic choices

most economic systems today are?

mixed economies

what is meant by the term mixed economy and how do they make their decision?

mixed economy is both capitalism and socialism and they make a vote.

Land property

Where all natural resources are

Capital

finance and accounting

list and describe all 6 economic goals.

) Economic Security- the freedom to feel safe no matter where we are 2) Economic Stability-refers to maintaining stable prices and full employment and keeping economic growth reasonably smooth and steady. 3) Economic Growth- the ability of the economy to produce increasing quantities of goods and services 4) Economic Freedom- The freedom to own property, to make a profit, and to make choices about what to produce, buy, and sell 5) Economic Efficiency- wise use of available resources so as to obtain the greatest benefits possible 6) Economic Equity- the attempt to balance an economic policy so that everyone benefits fairly

vocab

1. Capitalism- an economic and political system in which trade is managed by the state 2. Communism- a political theory derived from Karl Marx, advocating class war and leading to a society in which all property is publicly owned and each person works and is paid according to their abilities and needs. 3.Public Works- the work of building such things as roads, schools, and reservoirs, carried out by the government for the community. 4. Socialism- a political and economic theory of social organization that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.

list the 7 characteristics of the american economic system.

1. Economic Freedom-Individuals have the right to choose their occupations and work wherever they can find jobs 2. Competition- The regulating force of the economy 3. Private Property- Individuals and businesses have the right to buy and sell as much property as they want 4. Contracts- individuals and businesses have the right to make agreements to buy and sell goods 5. Self-Interest- The motivating force of the economy 6. Voluntary Exchange- Consumers and producers my freely buy and sell goods when the opportunity cost of such exchange are worthwhile 7. Profit Motive- American free enterprise is driven for profit, the gain that occurs during financial dealings

There are 7 Principles of Economic thinking. What are they? Briefly describe each one?

1. scarcity forces tradeoff-unlimited desires, limited resources. 2. cost versus benefits-weight the pros and cons 3. Thinking at the margin-most of the decisions we make each day involve choices about a little more or a little less of something rather than making a wholescale change. 4. incentives matter-people respond to incentives in general predictable ways. 5. trade makes people better off-we need to concentrate on what we do best and then trade with others for what they do best. 6. markets coordinate trade-markets usually do better than anyone or anything else at coordinating exchanges. 7. future consequences count-decisions made today have consequences.

what are the 3 fundamental economic questions that all societies must answer?

1. what goods and services will be produced. 2. how will they be produced. 3. who will consume the goods and services

A point inside the ppf curve represents what

A point inside the ppf line represents it is inefficient

services

A type of economic activity that is intangible

Who wrote the wealth of nations? What was his nickname

Adam Smith, his nickname was "the invisible hand"

Vocab

Benefits-what you gain from something in terms of money, time, experience, or other improvements in your situation Costs-what you spend in money, time, effort, or other sacrifices to get something Incentives- a thing that motivates something Marginal Benefits- what you gain by adding one more unit Marginal Costs- what you give up to add one unit to an activity Resource- anything used to produce an economic good or service; resources are limited/scarce because they exist in finite amounts Scarcity-the condition that results because people have limited resources but unlimited wants Tradeoff- the exchange of one benefit or advantage for another that is thought to be better

What does economics mean?

Branch of knowledge involving production consumption and transfer of wealth

What is the difference between financial capital and physical capital? Which one do we use more in economics?

Financial is mone related and physical is body related

Goods

Goods are utilities that satisfy humans needs or wants

What is meant by the term Invisible Hand?

Goods in a free market

What are some reasons we covered in class that shortages occur

If a resources is out for awhile

what are the 3 factors of production

Land, Labor, Capital

If the economy grows what happens to the ppf curve?

PPF curve moves to the right

If the economy shrinks what happens to the ppf curve?

PPF curve moves to the left

What is meant by the term Human Capital?

Skills and knowledge from a human being

What does the law of diminishing marginal utility mean? Give example

Stating that as a person increases consumption of a product while keeping consumption of a product constant, there is a decline in the marginal utility

Who assembles and organizes the resources necessary to produce goods and services

The government

Explain the guns vs butter tradeoff.

The guns vs butter tradeoff model is the classic example of PPF

Define opportunity cost?

The value of the next best alternative

Why are goods and services scarce

There is a limit on resources

What is the difference between positive economics and normative economics?

positive economics entails observing economic choices and predicting economic events, while normative economics entails making value judgements abo.;l;.ut existing economic policies

What does PPF mean? what does it mean?

production possibility frontier, a curve depicting all maximum output possibilities for 2 goods?

A point outside the ppf line represents what?

represents that is is unattainable