ECONNOMICS REVIEWER

Soil, minerals, air, water, and coal are all examples of

natural resources

also allows money and resources to leak out of the circular flow model.

open economy

Economics is the study of how?

people use their scarce resources to satisfy their unlimited wants.

purchase the factors of production from the household in the factor market

Firms

is about the market for the goods. For whom will the goods and services be produced? The young or old, the male or female market, the low- income or the income groups?

For whom to produce?

Which is NOT a characteristic of a Market Economy?

Freedom of the Press

Application of economic theory and econometrics in specific settings with the goal of analyzing potential outcomes.

APPLIED ECONOMICS

Is when supply is limited. explains why there are some products that are very expensive in the Philippines.

Absolute Scarcity

the father of modern economics

Adam Smith

With the presence of scarcity, there is a need to make decisions in choosing how to maximize the use of the scarce resources to satisfy as many wants as possible.

CHOICE AND DECISION MAKING

Man-made resources used in production of goods and services, which include machineries and equipment.

Capital

there is a dominant, centralized authority - usually the government - that controls a significant portion of the economic structure.

Command Economy

Also known as a planned system, the_______________ system is common in communist societies since production decisions are the preserve of the government.

Command economic

are those belonging to Filipino citizens and corporations.

ECONOMY'S RESOURCES

also known as factors of production, are the resources used to produce goods and services.

Economic Resources

4 factors of production

Economic resources Land Labor Capital

is a social science because it studies human behavior just like Psychology and Sociology.

Economics

is based on goods, services, and work, all of which follow certain established trends. It relies a lot on people, and there is very little division of labor or specialization.

Traditional Economy

The income received by labors is referred to as.

WAGE

society must decide what goods and services should be produced in the economy.

What to produce? How much?

Which of the following is NOT one of the three basic questions of economics when looking at economic systems?

a. What is the price of the goods?

Scarcity arises because all societies have

a. limited productive resources to satisfy unlimited wants

How do you satisfy your unlimited wants in a world of limited resources?

by making choices

illustrates the economic relationships among all players in the economy: households, firms, the factors market, the goodsand-services market, government, and foreign trade.

circular flow model

is a diagram illustrating the flow of spending and income in an economy.

circular flow model

such as the example to the left, all the spending of households and firms must equal the income received by the factors and goods-and-services markets.

closed economy,

Which of the following is a need?

clothes

A person that takes a risk by starting a new business.

entrepreneur

Economics is about making choices.

true

is a basic question of economics?

what to produce? how much? how to produce? for whom to produce?

is the social science that involves the use of scarce resources to satisfy unlimited wants.

Economics

studies how individuals make choices in allocating scarce resources to satisfy their unlimited wants.

Economics

Economics is the study of how people seek to satisfy their needs and wants by making choices.

Economics True

flow of goods and services to the foreign sector from businesses

Export

is net of GNP after deducting NET FACTOR INCOME from abroad or by deducting factor income from abroad and adding back FACTOR PAYMENTS to other countries.

GDP

The difference between a good and a service is that:

Goods are tangible and services are not

Better indicator of domestic employment opportunities. Defined as the market value of final products produced within the country.

Gross Domestic Product

Market value of final products, both sold and unsold, produced by the resources of the economy in a given period.

Gross National Product

the major consumers of economic goods and services

Households

What is the fundamental problem of economics?

How to fulfill our unlimited wants and needs with limited resources?

is a question on the production method that will be used to produce the goods and services.

How to produce?

he owner of capital earns an income called.

INTEREST

refer to an inflow of money into the economy

Injection

First to use the phrase "APPLIED ECONOMICS" to designate the application of economic theory to the interpretation and explanation of particular economic phenomena.

John Neville Keynes

Physical and human effort exerted in production. It covers manual workers like construction workers, machine operators, and production workers, as well as professionals like nurses, lawyers and doctors. The term also includes jeepney drivers, farmers and fisherman.

Labor

Soil and natural resources that are found in nature and are not man-made.

Land

refer to an outflow of money into the economy

Leakages

Antonio has an Economic test tomorrow and knows that if he stays up and studies until 11 p.m. he has a good chance of making an A on the test. However he is really tired and knows that if he goes to bed at 10:00 p.m. he can easily make a B on the exam. What is Antonio's opportunity cost if he goes to bed at 11:00 p.m.

Losing one hour of sleep

is determined by supply and demand

MARKET VALUE

It studies economic system as a whole rather than the individual economic units that make up the economy.

Macroeconomics

are based on the concept of free markets. In other words, there is very little government interference. The government exercises little control over resources, and it does not interfere with important segments of the economy. Instead, regulation comes from the people and the relationship between supply and demand.

Market Economy

studies the decision and choices of the individual units and how these decisions affects the prices of goods in the market.

Microeconomics

is NOT a Factor of Production

Money

occur when companies pay wages in return for labor or services provided by individuals, as well as when individuals spend money to obtain goods or services produced by companies.

Money flow

from abroad is net export of factor service equal to Factor income from abroad less the factor payments of other countries.

NET FACTOR INCOME

Injections are less than Leakages

National Income Decreases

Injections are more than Leakages

National Income Increases

The loss of potential gain from other alternatives when one alternative is chosen. The concept of _____________________ holds true for individuals, businesses, and even a society. In making a choice, trade-offs are involved.

Opportunity Cost

It is also concerned with the process of setting prices of goods that is also known as;

PRICE THEORY

The following are injections (additions to) the circular flow:

Payment for Export

The following are leakages or withdrawals from the circular flow, except:

Payment for Exports

Owners of lands receive a payment known as

RENT

includes the factors of production, such as labor or land, that flow from individuals to companies, as well as the flow of goods and services from companies to individuals.

Real Flow

Is when a goods is scarce compared to its demand. occurs not because the good is scarce per se and is difficult to obtain but because of the circumstances that surround the availability of the good.

Relative Scarcity

Is a condition where there are insufficient resources to satisfy all the need and wants of a population.

SCARCITY

Johnny has $50 and wants to buy a pair of Nike Shoes that cost $95. He has to settle for a pair of Sketchers for $45. In economic terms Johnny is facing the problem of:

Scarcity

What is the major difference between scarcity and a shortage?

Shortages are temporary and scarcity always exist

The study of society and how people behave and influence the world around them.

Social Science

Opportunity Cost is best defined as

The best rejected alternative you give up when making a decision

Which of the following would be an example of human capital?

The skills of the shoe designers at Nike

The opportunity cost of a chosen item or activity is

The value of the best alternative you must pass up