Chapter 2: Basic Economic Problems, Economic Systems, Economic Models (Circular Flow Model and Product Possibility Frontier) Flashcards
a common difficulty that an economy faces
The allocation of resources
This problem is about making judgments about which commodities to produce and in what quantities they should be produced.
What to produce?
this issue concerns the techniques that must be adopted and used in the creation of goods and services and the production of goods and services.
How to produce?
What resources are short in supply?
Land, labor, machines, capital equipment, tools, and natural resources
mechanization and mass production, Creation of goods
Capital Intensive
services are generated using blank processes due to the high degree of client engagement.
Labor-intensive
one of the most pressing economic issues is determining which goods should be produced for which segments of society.
For whom to produce?
Blank are in demand from all segments of society
Essential goods and services
Blank are only desired by a select few
luxury goods and services
Economic selections of goods and services are based on
popular interest and preferences
the central concern of an economy also includes Blank and Blank
efficient resource utilization and resource development
it is described what is used in production process to create output or finished goods or services.
Factors of Production
the quantity of the output is determined by the amount of various of inputs that are used.
Production function
Adam Smith, David Ricardo and Karl Marx, classified Blank, blank, and blank as components of production.
land, labor and capital
the two most important inputs for processes and earnings today.
Capital and Labor
Source of all materials and food whether in liquid, solid, gaseous form, in or above the earth.
Land
Examples of Land as a factor of production
Agricultural land to commercial real estate
or
From a specific piece of land oil and gold
Farmers boost the blank and blank of land by cultivating crops on it.
value and utility
Land was responsible for providing blank for a group of early French economists known as the blank, who predates the classical political economists.
economic value
Physiocrats
The most important component of any real estate venture
Land
Available physical and mental talents of the people who have to produce goods and services
Labor
The work put in by an individual to bring a product or service to market.
Labor
It is a term used in the software industry to describe the effort done by project managers and developers to create the final product, even an artist engaged in the creation of art.
Labor
Workers in the production line are compensated for their blank and blank with pay that are determined by their blank and blank.
time and effort
skill and training
Labor performed by an unskilled and untrained individual is usually blank at a blank.
compensated at a low rate
Refers to skilled and trained personnel who are paid more because they bring more to the task than their physical capacity.
Human capital
Tangible physical good that a person or society creates in the expectation that its use will improve or increase future production
Capital
Capital is a blank for modern mainstream neoclassical economist
a major driver of value
Refers to the purchase of commodities manufactured with money in manufacturing as an element of production.
Capital
Examples of Capital according to the Discussion
Tractor, office desks, and chairs
Money is not a blank but a resource because it is not used directly in the creation of a good or service.
factor of production
a resource
it helps production processes by allowing entrepreneurs and business owners to purchase capital goods or land as well as pay workers.
Money
People are combing the other three factors of production to create some products or services to sell
Entrepreneurship
Countries are building the blank and blank to make it simpler for entrepreneurs to start businesses since entrepreneurs are critical for blank.
required framework and policies
economic growth
Some production parameters may be blank than others depending on the situation.
more significant
Significant production parameters for a software corporation
Labor
Significant production parameters for a corporation that creates and rents out office space
Land and Capital
It is made up of a variety of organizations, agencies, companies, decision-making processes, and consumption patterns that make up a community economic structure around the world
Economic System
What are regulated by economic systems?
factors of production such as land, capital, labor, and physical resources
A type of economic System that economic decisions are made with great influence from the past.
Traditional Economy
In a traditional economy, the exchange of goods, services and labor, all of which follow well-established patterns, is heavily reliant on individuals with little blank or blank.
division of Labor or specialization
the most fundamental and oldest of the four types of economic system
Traditional Economy
Most widespread in rural areas of second and third world countries where blank and blank are the mainstays of the economy
farming and other traditional income-generating industries
An economic system that is affected by traditions and ideas and focuses on the fundamentals of products, services, and work.
Traditional Economy
Traditional economy has characteristics such as ownership of blank, the leader makes decisions about blank, which is the blank of the economy, blank govern the production, distribution, and use of economic resources, not receptive to blank, the economy is only its blank with culture and religion taking precedence, and blank are utilized to collect blank for manufacturing.
communal land Agricultural production Foundation customary customs new technologies third priority minds raw materials
An economic system that factors of production are owned and managed by the state. Decisions in answering the basic economic problems are planned, done, and dictated by the government.
Command Economy
Also known as Planned Economy
Command Economy
An economic system that has is a powerful centralized authority, usually the government in charge of a large section of the economy
Command Economy
If a country’s economy has a blank, it’s likely that it’ll lean toward a command economy.
lot of resources
command economy
In a command economy, centralized control is ideal for valuable resources like blank or blank. Other less essential areas of the economy such as blank, are blank.
gold or oil
agriculture, are regulated by the people
An economic system that individual consumers and businesses interact to solve the economic problem.
Market Economy
Also known as Free Market Economy
Market Economy
In a Market Economy, the blank has little control over resources and avoids interfering with vital economic sectors. Rather, people in the blank are the sources of regulation.
government
supply-demand connection
An economic system that is influenced by demand and supply forces
Market Economy
An economic system that combines two economic systems
Mixed Economy
Also known as Dual Systems
Mixed Economy
A mixed economy is a blank that is blank
A market system
heavily regulated
shows the basic economic relationships within a market economy
Circular Flow Model
The Circular Flow Model exemplifies the balance that exists in our economy between blank and blank.
injections and leakages
The Circular Flow Model shows the blank, blank, and blank.
households, corporations, and governments
We also have the banking system which enables blank and as we’ll see in a moment, aids in the productive conversion of blank into blank to develop the economy.
money exchange
savings
investment
used to buy products and services in the economy circular cycle.
Money
In the economy, blank and blank flow in one direction, while black flows in the opposite direction.
goods and services
money
What are the prices that correspond to land, labor, capital, and entrepreneurship as production elements?
Rent, labor, and profit
Households blank from businesses and blank in exchange for money
purchase goods and services
sell their labor, land, and capital
Businesses generate money in profits by blank and blank to households and pay blank to households in exchange for the use of factors of production.
selling goods and services
wages, interest, and profits
levied on individuals and corporations by governments in order to offer certain benefits to everyone
Taxes
Main players of the economy
individuals and businesses
The circular flow model’s main goal
to figure out how money circulates in a given economy
circular flow paradigm begins with the blank which spends money and ends with the blank, which creates goods
consumer sector
producer sector
a curve and business analysis that depicts the variations in the amounts that can be produced of two products if they both rely on the same finite resource.
Production Possibility Frontier
Production Possibility Frontier can be used to demonstrate that the country’s economy operates at its blank level when it produces only what it is blank to create and trades for the blank of what it requires.
most efficient
best qualified
remainder
Production Possibility Frontier is also known as?
production possibility curve
It is shown visually as an arc with one commodity on the X-axis and the other on the Y-axis
production possibility curve
or
Production Possibility Frontier
Points within the curve are considered blank, whereas points outside the curve are blank that cannot be achieved with their current resources.
inefficient resource utilization
goals of the economy
The most efficient number of the two commodities that can be produced with given resources is shown?
along the curve
Moving upward or downward along the curve would require the economy to blank of one of the commodities and blank the other.
reduce the production
increase
