Economics Cma Final Review

Front 1

what is TINSTAAFL?

Back 1

it is an abbreviation for "there is no such thing as a free lunch". It means that nothing is ever free

Front 2

Define and give examples of scarcity.

Back 2

the condition that arises because society doesn't have enough resources to produce all the things that people would like to have. ex. houses, boats, cars etc.

Front 3

Define what capital is.

Back 3

the tools, equipment, and factories used in the production of goods and services.

Front 4

who are entreprenuers?

Back 4

a risk taker in search of profits

Front 5

what are the three economic questions?

Back 5

what to produce, who to produce for, and how to produce

Front 6

what are trade-offs?

Back 6

trade offs are alternative choices that people make when spending their time or money

Front 7

give examples of opportunity cost and want

Back 7

opportunity cost- giving up something you want such as a soccer ball for a more efficent choice such as clothing
want- a way of expressing a need such as you feel you have a need for food

Front 8

tell the difference between a good and a service.

Back 8

a good is a tangible comodity like a book or a cellphone a service is work that is performed for someone like how a bus driver drives people to the places they need to be

Front 9

who is a consumer?

Back 9

people who use goods and services to satisfy wants and needs

Front 10

what does "keeping up with the joneses" mean?

Back 10

it means keeping up with buying what is popular and cool.

Front 11

give examples of value paradox.

Back 11

something essential such as water is valued at a greater price then diamonds are.

Front 12

define free enterprise.

Back 12

free enterprise is when consumers and privately owned businesses rather than the governmant, jointly make the majority of the what, who, and how decisions

Front 13

define an economic system.

Back 13

an organized way of providing for the wants and needs of the people of a society.

Front 14

what is a tradtitional market system?

Back 14

a system where the allocation of scarce resources and nearly all other economic activity stems from ritual, customs, or habit.

Front 15

what are the strengths and weaknesses of a traditional economy, a command economy, and a market economy

Back 15

traditional strengths- everyone knows what role to play, little uncertainty exists over what and how to produce, who is determined by customs and traditions
Traditional weaknesses- new ideas tend to be discouraged, people are punished for breaking rules or acting differently
Command strengths- it can drastically change direction in a relatively short time
Command weaknesses- it isn't designed to meet the needs and wants of people, there is a lack of incentive for people to work, people all recieve similar wages, people rarely lose their jobs, it requires a large decision making bureaucracy, it doesn't have the flexibility to deal with day-to-day problems, and people with new or unique ideas find it difficult to get ahead in a command economy

Front 16

what are the seven economic and social goals?

Back 16

economic freedom, economic efficiency, economic equity, economic security, full employment, price stability, and economic growth

Front 17

what are the four characteristics of capitalism?

Back 17

economic freedom, voluntary exchange, private property, and profit motive

Front 18

define what a business organization is.

Back 18

a profit seeking enterprise that serves as a main link between scarce resources and consumer satisfaction.

Front 19

what are the features of a sole proprietorship, partnership, and corporation?

Back 19

sole proprietorship- the business is owned and run by one person smallest in size, have only a fraction of the total sales of all business partnership- jointly owned by two or more persons, similar strengths and weaknesses of a sole proprietorship, represent about 7% of all business organizations in the U.S., have only a small fraction of the total business sales and profits Corporation- recognized by the law as a separate legal entity having all the rights of an individual, have the right to buy and sell property, enter into legal contracts, and sue and be sued.

Front 20

what is the federal Securities and Exchange Comission?

Back 20

it is who a corporation must register with if they want to sell it's stock to the public.

Front 21

give examples of jobs not done for profit.

Back 21

volunteering at your local library, helping an old lady across the street, cleaning up a school playground, etc.

Front 22

give examples of direct and indirect roles that the government plays.

Back 22

direct role- producing electric power in a certain area in the country, providing police, fire, and emergency services etc.
indirect- regulating public utilities such as water, granting money to people in the form of social security etc.

Front 23

what is economic demand?

Back 23

the desire, ability, and willingness to buy a product

Front 24

how do you figure demand?

Back 24

you create a demand schedule and a demand curve

Front 25

how does demand effect price?

Back 25

if the demand for a product is higher then the price may go up but if the demand is lower then the price will go down so more people are interested in buying the product

Front 26

what are examples of the substitution effect?

Back 26

if the price for c.d's go down then consumers are more likely to buy the product, if the price at one gast station is higher then at another gas station the consumers are likely to go to the station with a lower price

Front 27

what are substitutes and compliments?

Back 27

substitute- a product that can be used in place of another product
complement- using one product to increase the use of use of two other products

Front 28

what is the difference between an elastic and an inelastic demand?

Back 28

demand is elastic when a relatively small change in price causes a relatively large change in the quantity demanded. An inelastic demand is when a given change in price causes a relatively smaller change in the quantity demanded.

Front 29

tell what demand curves are, what they show, and how they are used.

Back 29

Demand curves are a type of graph that is used to help producers determine how much of a product to produce and at what to price the item at. They show the quantity that each consumer will demand at each and every price.

Front 30

Who is a supplier?

Back 30

everyone who offers an economic product for sale.

Front 31

keep in mind!!

Back 31

supply is different from demand

Front 32

what are supply curves?

Back 32

a graph that reflects the tendency of suppliers to offer greater quantities for sale at higher prices

Front 33

how do taxes and subsidies change supply?

Back 33

if the producer's inventory is taxed or fees are paid to recieve a license to produce, the supply curve shifts to the left. When production cost goes down, supply increases and the supply curve shifts to the right.

Front 34

define variable cost.

Back 34

a cost that does change when the business rate of operation or output changes

Front 35

what are the three stages of return?

Back 35

diminishing, increasing, and negative returns.

Front 36

give examples of fixed and variable costs

Back 36

fixed cost- salaries paid to executives, rent payments, local and state property taxes, and the gradual wear and tear on capital goods over time and through use.
Variable costs- the electric power to run the machines or freight charges on shpments of a final product

Front 37

what are price signals?

Back 37

a sign that tells the producer to produce less and have buyers buy more or for them to produce more and have buyers buy less

Front 38

give examples of the effects of prices in command economies.

Back 38

consumers face limited choices, government palnners rather than prices allocate both resources and products, the government usually decides what will be produced. Prices on houses, food, and transportation are usually low.

Front 39

what are the prices and behavior that occur when rationing occurs?

Back 39

People feel that their share is too small. Some people feel they are more important than others. prices go up on products because there is a limited amount of products.

Front 40

how do you get a surplus and how do you get a shortage?

Back 40

surplus- when the quantity supplied is greater than the quantity demanded
Shortage- when the quantity demanded is greater than the quantity supplied

Front 41

define what a loss leader is.

Back 41

an item specially priced below cost to attract customers

Front 42

give examples of a price ceiling.

Back 42

a shortage in apartments because the price has dropped, a shortage in gasoline because the prices have been lowered

Front 43

give examples of a price floor.

Back 43

people must be paid minimum wage for the jobs they do, a person cannot be paid a low and unfair price for doing a service that is worth a lot of money.