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17 Cards in this Set
- Front
- Back
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The set of mechanisms and institutions that resolves the what, how, and for whom questions for an economy
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Economic System
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An economic system with no government involvement so that private firms account for all production
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Pure Market Economy
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An economic system in which all resources are government-owned and production is coordinated by the central plans of government
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Pure Centrally Planned Economy
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An economic system that mixes central planning with competitive markes
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Mixed Economy
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Describes the U.S. economic system, where markets play a relatively large role
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Market Economy
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An economic system in the process of shifting from central planning to competitive markets
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Transitional Economy
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An economic system shaped largely by custom or religion
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Traditional Economy
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Shows the possible combinations of the two types of goods that can be produced when available resources are employed fully and efficiently
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Production Possibilities Frontier (PPF)
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Producing the maximum possible output from available resources
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Efficiency
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Each additional increment of one good requires the economy to give up successively larger increments of the other good
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Law of increasing opportunity cost
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An expansion in the economy's production possibilities or ability to produce
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Economic Growth
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The worker, firm, region, or country with the lowest opportunity cost of producing an output should specialize in that output
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Law of comparative advantage
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Occurs when individual workers focus on single tasks, enabling each one to be more efficient and productive
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Specialization
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To be able to make something using fewer resources than other producers require
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Absolute Advantage
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Anything that everyone is willing to accept in exchange for goods and services
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Money
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A system of exchange in which products are traded directly for other products
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Barter
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An action that sorts the production process into separate tasks to be carried out by separate workers
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Division of Labor
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