Unit 5 Flashcards
What are some choices that Americans can make?
What to wear, what to eat, were to work, who to elect, whether or not they believe in God, whether to be happy or not, how they treat people
Do we have a responsibility to make choices?
yes
What are some suggestions for making good choices?
- Seek God’s will
- Choose what will bless others the most
- Choose what will be best in the long run
- get wise counsel
- pray
What is one consequence of making bad choices?
It is harder to make good choices
How does the significance of the choices we make change as we get older?
They have more significance as we get older
Choices often have what consequences?
unintended
Did John Fund expect to see a trend toward a greater dependence on the government or toward reassertion of individual rights and freedoms?
toward reassertion
What was the comment by the East German girl on how she expected the government would always treat them?
They would always treat them like children
What can one learn from a trip to the ruins of the Berlin Wall?
that governments never give up power voluntarily
What are 3 basic economic questions that people in a society decide?
- What goods and services will be produced and in what quantities?
- How will the goods and services be produced?
- How will the goods and services be distributed across the population
Why do people have to make economic choices?
Because of limited resources
In what ways do people act that they do not want to admit scarcity?
- They believe that there is enough for everyone
- They do not believe that there is no room for new businesses
- People ignore making economic decisions and buy more things with debt
What are the consequences of believing in an unlimited pie?
It can motivate people to produce new goods and services and it can make people go into debt
What is a cost-benefit analysis?
determining if the benefit of taking a step is worth the cost
What are examples of cost-benefit analysis by an individual, business, and government?
Individual - Is the cost of eating a candy bar worth the benefit?
Business - I the cost of advertising worth the benefit?
Government - Is the cost of building a bigger library worth the benefit?
What is an economic margin?
A small step that makes a big difference in an action that is being taken
Why is the study of margins important?
Because that is where important economic decisions are made
What is a marginal benefit?
The change in total benefit that results from an action
What is a marginal cost?
The change in total cost that results from an action
What are goods and services?
Goods are tangible items that are produced for consumption. Services are tangible duties that are performed for pay
What are production resources?
Factors of production, elements that producers use to create goods and services, material and human resources, capital.
What is the economic definition of capital?
The materials used to produce goods
What are the production possibilities?
The maximum production that an economy can have given it’s production resources
What is opportunity cost?
The greatest benefit that is given up when a choice is made
What is economy of scale?
When the average total cost per item decreases as the number of units produced increases
Steve Forbes says that Capitalism is a moral system because it is based on what?
trust
What does it mean to say that capitalism is a bottom-up and not top-down economic system?
It is not mandated and centrally planned; it operates through individuals taking risks
In what area of the economy does Forbes say that managed competition has been tried and failed?
Health care
What percentage of economic activity in the U.S. consists of personal consumption?
70%
What is an economic incentive?
A benefit that motivates action
Name 2 common incentives for consumers
Reduced prices and subsidies
What is an unintended consequence?
A result of an action that was not anticipated and is usually negative
What is a substitution good?
An alternative to the item that the consumer would otherwise buy
What is consumer choice theory?
It examines how consumers decide what to buy
What does utility mean in economics?
satisfaction
What is the law of diminishing marginal utility?
As more of an item is consumed, each unit has less value to the consumer, to the point at which one more unit provides no utility
What are some aspects of cost-benefit analysis involved in making a decision about going to college?
Costs - financial cost, opportunity cost of not having a full-time job during that time, may be compromises in spiritual principles
Benefits - college graduates have more stable jobs and more opportunities, may gain a broader view of the world, may gain friends
What are some trade-offs involved in the decision about going to college?
Less income now for more income later, if you don’t go to college right after high school, it may be harder later on or it may give you more motivation, if you work and save money you could start your own business.
How do capitalism and socialism differ in terms of who makes economic decisions?
In Capitalism millions of people who buy and sell make the decisions and socialism government officials make the decisions
Define economic efficiency
The goal of having the people in an economy being as productive as possible in making goods and services
Define economic equity
the goal of having goods and services shared as equally as possible among the people in a society
Define economic freedom
The goal of allowing people to buy and sell whatever they want in an economy
Define economic security
Being sure that everyone his what they need (jobs, healthcare, necessities, and cannot fall roo far
Define economic stability
Protection from fluctuation in econo9mic activity from serious loss
What are some incentives that government can offer?
- they can forgo collecting property or business tax for a few years
- build new roads
- allowing homeowners to deduct from their taxable income the interest they pay on a name mortgage loan
4, provide benefits to attract business
How can government be involved in the allocation of goods and services?
redistribution of wealth through taxes
Public choice applies to what other field?
Political science
According to public choice theory, what is the basic motivation for voters of elected government officials?
Self interest
