The Economic Problem Flashcards
Society achieves _______________ when it is producing the greatest quantity of goods and services possible from its resources.
Technical efficiency
Society achieves __________________ if it produces the types and quantities of goods and services that most satisfies people.
allocative efficiency
What is the difference between allocative efficiency and technical efficiency?
Allocative efficiency deals with what people want the most, and technical efficiency deals with what is possible from resources provided of a society.
People are entitled to a share of goods and services based on what they contribute to society. Those making larger contributions to receive correspondingly larger shares. those who are unable to contribute are continuing issues.
A. Needs standard
B. contributory standard
C. equality standard
contributory standard
Under the ______________ standard, a person’s contribution to society is irrelevant. goods and services are distributed based on the needs of different households.
A. Needs standard
B. contributory standard
C. equality standard
Needs standard
Every person is entitled to an equal share of goods and services simply because they are human. The concern about this standard is if everyone is receiving equal it may lead to people not working as hard as they can
A. Needs standard
B. contributory standard
C. equality standard
Equality standard
What are the 6 categories of factors of production?
- land
- Labor
- Capital (factories, machines, tools)
- Entrepreneurship (ability to detect new business opportunities)
- Technology (application of scientific knowledge)
- Scarcity
Because of scarcity humankind must engage in what?
Production choices
Model used to illustrate problems associated with scarcity. Shows max feasible combos of 2 goods/services that society can produce assuming all resources used in most productive manner.
Production possibilities curve
The assumption that society is only capable of producing 2 goods is part of what curve?
Production Possibilities Curve
When is technical efficiency achieved?
When more of one good cannot be produced without producing less of another.
What causes technical inefficiency?
Inefficient production methods being used or resources not being fully used.
What does the law of increasing costs say?
As more of s good or service is produced, it’s opportunity cost will rise.
When will the line be straight on an economics model graph?
If resources are not being specialized in particular uses (e.g. Focusing on guns more butter).
Opportunity will be constant and the production possibilities curve will be straight.
Allocative Efficiency deals with society’s what?
Likes and dislikes
