unit 1 test Flashcards
4 needs of a PPC graph
fixed technology
fixed resources
only 2 goods
full employment
4 factors of production
land
labor
entrepurship
capitol
what is utility
happiness (happy points)
what would increase a PPC graph (shift outward)
technology increases
productivity increases
human and physical capital increases
normative statement
an opinion
positive statement
a fact
3 economic systems
market
command
traditional
macroeconomics goes over
international trade
inflation
national markets
eight economic goals
economic growth
full employment
economic efficiency
price level stability
equal distribution of income
economic freedom
economic security
balance of trade
absolute advantage
can have both goods
faster more efficient
comparative advantage
cannot have both goods
lower opportunity cost
ceteris paribus
all things unchanged, equal
strength and weakness of command economy
strength: quick growth of economy
weakness: no designed goods for the wants of consumers or lack of incentives equal unexpected work
strengths and weaknesses of traditional economy
strengths: everyone knows their role or life is stable and predictable
weakness: discourage new ideas or lack of progress = low standard of living
strengths and weaknesses of market economy
strengths: adjust over time, variety of goods, decision making is decentralized
weakness: deciding whom to produce for and competition
why does the law of demand exist
income effect
substitution effect
diminishing marginal utility
why does the law of supply exist
the increasing marginal cost
