Economics Mac-attack GMAS

Define productivity as the relationship of inputs to outputs.

The quantity of output per unit of input, an increase in productivity can be more goods and services created with the same amount of resources or the same amount of goods and services with less resources. More productive workers lead to a higher standard of living.

SSEF3 Explain that both parties gain as a result of voluntary, non-fraudulent exchange.

We don't make all of our electronic devices, countries do not make all of the goods and services they need. Specialization is the basis of trade and interdependence among individuals, businesses, cities, regions and countries. Wisconsin = dairy Florida = oranges.

SSEF4 Compare command, market, and mixed economic systems with regard to private ownership, profit motive, consumer sovereignty, competition, and government regulation.

- Command (centralized) Economy - the issues of production and distribution are resolved through central planning and control - Market (decentralized) Economy - market prices are determined by consumers and producers, all pursuing their own self-interest. - Mixed Economy - there are no pure market or command economies, most economies today contain both command and market characteristics - Profit Motive - the desire to make money causes people to work hard to produce goods and services. - Consumer Sovereignty - people are free to choose without government interference or regulation - Competition - consumers compete with other consumers for goods and services, producers compete with other producers for consumers. - Governmental Regulation - the government intervention in the decisions of consumer and producers in the market.

SSEF4 Evaluate how well each type of system answers the three economic questions and meets the broad social and economic goals of freedom, security, equity, growth, efficiency, and stability.

- Economic Freedom: freedom of choice by consumers and producers. - Economic Security: protection against some risks as consumers and producers - Economic Equity: Fairness? Right or wrong? Equal opportunity? Equal distribution of wealth and income? - Economic Growth: an increase in the production of goods and services over time, measured by real GDP, 3 to 4 % is a reasonable and sustainable yearly growth rate. - Economic Efficiency: allocation of resources so that no one is hurt at the expense of someone else gaining, lower costs to produce. - Economic Stability: maintain stable prices, full employment and economic growth

SSEF2 Illustrate by means of a production possibilities curve the trade offs between two options.

- Production Possibilities Curve: A table or graph that shows the full employment capacity of an economy in the form of possible combinations of two goods, or two bundles of goods, that could be produced with a given amount of productive resources and level of technology. - Moving from point B to C indicates that this society now prefers to build more consumer goods and less capital goods. This is the trade-off when choosing a different combination of goods

SSEF5 Explain why government provides public goods and services, redistributes income, protects property rights, and resolves market failures.

- Public Goods and Services: Those goods and services that cannot be easily be restricted to those who pay for them. Shared consumption and non-exclusion determine what a public good is. - Income Redistribution: The re-allocation of wealth and income, 3/4ths of national income is wages. - Property Rights: legal ownership of resources, government's role is to protect property rights. - Market Failures: private police or military, imperfect information in the market, pollution costs.

SSEF5 Give examples of government regulation and deregulation and their effects on consumers and producers.

Comparing the expected costs of a new policy or a change in an existing policy to the expected benefits.

SSEF3 Give examples of how individuals and businesses specialize.

Division of Labor refers to the practice of dividing the work to make something into separate tasks. Workers become specialized in different tasks. We earn a living by doing tasks, taking our wages to purchase goods and services from other workers. Division of Labor and Specialization is the basis for an economy to exist. 3 benefits are doing it better, no time required to switch tasks, create more effective ways to do the task.

SSEF2 Explain that rational decisions occur when the marginal benefits of an action equal or exceed the marginal costs.

Economic decisions are made on the basis of comparing marginal costs and marginal benefits. There are not many all or none decisions. Almost all decisions are marginal, we don't typically make a decision between studying all day or watching TV all day, we choose between studying a little more and watching a little less TV or vice versa.

Give examples of how investment in education can lead to a higher standard of living.

High investments in education, physical and human capital equals higher productivity, low inflation, political stability and free trade.

Give illustrations of investment in equipment and technology and explain their relationship to economic growth.

Improvements in education, experience, skill level of the workforce (human capital), greater amounts of physical capital, improved technology.

SSEF1 Define and give examples of productive resources (factors of production) (e.g., land (natural), labor (human), capital (capital goods), entrepreneurship).

Land = natural resources; Labor = people with their education, skills and abilities; Capital = the goods and services used to make other consumer goods and services; Entrepreneurs = individuals who take the risk and combine the productive resources (factors of production) to produce goods and services and profit by selling these to consumers.

SSEF1 Define opportunity cost as the next best alternative given up when individuals, businesses, and governments confront scarcity by making choices.

Opportunity cost is what you give up to obtain something else, one good or service for another. Governments often have to decide on one good or service at the expense of another. Trade-off is giving up one benefit or advantage in order to gain another one that may be better.

SSEF1 Define scarcity as a basic condition that exists when unlimited wants exceed limited productive resources.

Scarcity exists because human wants exceed the capacity of available resources. This basic problem of scarcity is faced by all individuals, organizations, businesses and governments.

SSEF1 List a variety of strategies for allocating scarce resources.

The different strategies include, price, contests, force, sharing, lottery, command, 1st come 1st served, and personal characteristics.