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31 Cards in this Set

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  • Back

marginal cost

the cost of producing

scarcity

the principle that limited amounts of goods and services are available to meet unlimited wants

need

something essential for survival

opportunity cost

the most desirable alternative given up as the result of a decision


(if you go on a date, your cost is the idea that you are giving up something to go on that date)

factors of production

the resources that are used to make goods and services

land

all natural resources used to produce goods and services

marginal benefit

the extra benefit of adding one more unit

trade-off

the alternatives that we give up when we choose one course of action over another

profit

the amount of money a business receives in excess of it's expenses

laissez faire

the doctrine that government generally should not intervene in the market place

socialism

a range of economic and political systems based on the belief that wealth should be evenly distributed throughout society

competition

the struggle among producers for the dollars of consumers

safety net

a set of government programs that protect people who face unfavorable economic conditions

consumer sovereignty

the power or consumers to decide what gets produced

shortage example

consumers want pizza, but pizza place runs out :(

Guns or Butter

a country decided to produce more military goods (guns) so they have less resources to devote to the consumer goods (butter)

underutilization of resources

not using all of the resources that you could for the best production of goods and services

making a decision at the margin

picking the next best thing

law of increasing costs

as the cost of something goes up, then the production possibilities begin to alter or change because they don't make as much money

production possibilities curve

shows the idea that you are making choices which are the best choices in your situation

frontier of a production possibilities curve

the best possible place to make money

example of making a decision at the margin

do you or do you not hire new workers? what is best for the company?

Entrepreneur

a person who decides how to combine resources to make goods and services

advantages of a free market economy

freedom of choice, better prices, more products to choose from, encourages growth in the companies

characteristics of a traditional economy

relies on habit, custom, or ritual to decide the three kay economic choices. revolve around family, same thing year in and year out

product market

the arena of exchange in which households purchase goods and services from firms

centrally planned economy

an economic system in which the government makes all the decisions on the three key economic questions

describe the economy of the united states

predominantly a mixed economy, lean more toward the free market

what two systems were linked in the soviet union and china?

command economies, the idea of socialism, but mainly the idea of communism or a command economy

positive aspects of centrally planned economies

wouldn't have to worry about being unemployed

Mixed economy examples

US, Hong Kong, Canada, England