unit one econ test
what is one way the baker could inc. productivity
by using a recipe using less sugar
ex. of negative incentive
commiting a crime nad going to jail
ex. of a public good at the federal level of govt.
courts
what is an example of a scarce land resource
crude oil
how are resources allocated using personal characteristics
distributed by need or merit
what kinds of investments can lead to economic growth
firms made similar investments leading to large incorporations to increase productivity
what are the eight social and economic goals that nations try to meet
freedom, equity, security, growth, efficiency, stability, full employment, and sustainability
ex. of positive incentive
getting a job to earn money
how are resources allocated using force
give or take by using threats
ex. of an investment in education or human capital
healthy, skilled, well-educated
define redistribution of income
involves taking tax money from one group of individuals or firms and giving it to other individuals or firms
why do firms and the govt. invest in equipment and technology
it could inc. productivity in public goods and services
why does specialization increase productivity
it gets the job done faster and more efficiently
ex. of labor
janitor, teacher
what are the scarce productive resources
land, labor, capital, and entrepreneurship
define productivity
looks at the relationships between input and output
what type of economy do most countries have
market
ex. of land
natural resources
what is market failure
occurs when the private market is unable to produce goods and services in a way that the marginal benefit to society from the production of the good is equal to or greater than the marginal cost to society for producing the good
what does scarcity lead to
opportunity cost and trade offs
how are resources allocated using majority rule
ppl who have control over the product vote
define revenue
price times the quantity
what are the nine strategies for allocating scarce resources
price, majority, rule, contests, force, sharing, lottery, authority, first-come first-serve, personal characteristics
what is the primary factors that influence entrepreneurs to take risks
profit, job creation, innovation, and improving society
what are the four roles on govt. in the US economy
providing public goods and services, redistributing income, protecting property rights, resolving market failures
ex. of a public good at the local/state level of govt.
public education
what is economic equity
refers to the fairness within the economy
define standard of living
refers to the material well-being people in an economy can enjoy
define physical capital
refers to tools, machines, and structures used over and over again in the production of a good or service
define profit
revenue minus the cost
what is the difference between scarcity and a shortage of a good/service
scarcity will always exist while a shortage is temporary
define marginal
small or incremental change
ex. of redistribution of income or transfer payment
social welfare to low income citizens
how does improving the society influence entrepreneurs to take risks
some will start for-profit or non-profit companies bc they believe their product will help
what is a freerider
someone who enjoys the benefit of a good w/o incurring the cost of paying for it
define incentives
something that motivates individuals, businesses, and/or governments to undertake an action or avoid an action
define non-exclusion
that it is difficult or impossible to keep a person who is unwilling to pay from enjoying the benefits of the public goods
define marginal cost
the addition amount of effort, expense, or time one incurs from undertaking one more unit of action
define marginal benefit
the additional positive value one receives from undertaking one more unit of action
how does one typically inc. their standard of living
the amount of goods and services one can consume
ex. of deregulation
the bank act of 1933, Glass Steagall
ex. of an investment in equipment
the building of new factories, and/or the purchasing and implementation of new production tech
define shared consumption or non-rival goods
the consumption of the good by one person does not diminish the satisfaction enjoyed by another consumer who consumes the exact same product
ex. of output
the cookie itself
how are scare items allocated in a markey economy
the items usually carry a higher price
what are allocation strategies
the methods available to societies as they seek to answer questions
define deregulation
the reduction or elimination of govt power or rules in an industry
what is most commonly measured to determine economic growth and sustainability
the upward growth/ trend of GDP
define opportunity costs
the value of one's next best alternative given up when a choice is made
ex. of the govt. resolving a market failure
they break them up into smaller companies
how do providing jobs influence entrepreneurs to take risks
they could be motivated by the opportunity to create a successful business
how do businesses and consumers benefit from deregulation
they could inc. competition
why does the US govt. not allow monopolies
they don't want one business ruling the industry
how does the govt. try to correct neg. externalities
they increase taxes or regulations on the polluting industry
why does the govt. provide public goods
they only do it when the private market is unable to provide
ex. of govt. regulation
they protect citizens from corporate abuse
how does innovation influence entrepreneurs to take risks
they usually work as an employee experts in their industry before venturing out
what does allocated mean
to distribute
ex. of input
to make a cookie, the bakery must have ingredients
ex. of capital
tools, machines
what are the main three economic systems
tradition, command, and market
what are the three basic economic questions
what, how, for whom
define human capital
when a person brings their abilities to the production process
define specialization
when individuals or businesses concentrate on a single activity or an area of expertise when producing a good ot a service
define specialization of labor
when one person does a specific job in an assembly line
what is economic efficiency
when production is allocated to their most productive use
define shortage
when something becomes unavailable for a period of time due to circumstances affecting the market
what is the typical relationship between scarcity and price
when something is more scarce, it becomes more expensive to buy
when are rational decisions made
when the marginal benefits of an action equal opr exceed the marginal costs
what factors do business firms need to consider when deciding on how many workers to hire
when the marginal revenue generated by the human resources is equal to the marginal cost of the human resource
define non-fraudulent exchange
when trading is not illegal
define voluntary exchange
when two economic factors willingly trade one item for another bc the value of the item they are receiving is greater at the time of the item they are giving up to receive it
how are resources allocated using first come first serve
whoever shows up first gets the items before they run out (black friday)
define scarcity
a basic condition that exists when unlimited wants exceed limited productive resources
what does the market power refer to
a market failure
define economics
all about the choices made by businesses, individuals, or the govt
define govt. regulation
an act similar to a law, that must be enforced
what is the goal for price stability in a nation
an inc. of the overall price level of goods and services in the economy are predictable
ex. of property rights
any type of legal document
define externalities
both can be positive or negative -- some industries cause air pollution while making a product
what two characteristics make something scarce
both limited and desirable
ex. of entrepreneurship
business owner or founder