Foundations Of Economics Flashcards
A person who’s starts their own business
Entrepreneur
Examples of factors of production
Land
Labor
Capital
Entrepreneur
Difference between shortage and scarcity
Shortage- quantity demand is greater than quantity at market place
Scarcity- unlimited human wants vs. limited resources
Economic concept of guns and butter
Guns- resources allocated to nations defense
Butter- resources allocated for consumer goods
Opportunity cost
Loss of potential gain when alternative is chosen
Trad off
Exchange of something of value
What is making a decision at the margin
Letting past go and look to future
What does production possibilities curve show
A graph that shows alternative ways to use economy’s productive resources
What is the law or increasing costs
Explains production possibilities curve
Why are all goods scarce
Resources are limited
What does decision making grid do
Helps make decisions in a range or context
Example or human capital
Education
Production possibility frontier
Economy at most efficient level
Why are free market economies able to attain economic growth
Competition allows for innovation and growth
What economy is the United States
Free market
Main incentive for manufacture to sell product
Profit
Characteristics of centrally planned economy
Government has authority, makes economic decisions
Traditional economy
Roles and economic decisions defined by customs
When government provides safety net which economic goal is met
Bad conditions; natural disasters, injuries or job loses
3 basic economic questions
What to produce?
How to produce?
Who to produce for?
What do people supply on return for factor payments
Land
Labor
Entrepreneurship
Who created “invisible hand”
Adam Smith
What does specialization do for economy
Improves productivity
Economic goal concerned with using resources wisely and reduce waste
Economic efficiency, provide people with minimum standard and quality life
Working where you want is an example of what economic goal
Economic freedom
Innovation leads to what economic goal
Economic growth
Difference between command & market economy
Command- central authority determines basic functions/ production
Market economy- producers/ consumers determine production
