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30 Cards in this Set
- Front
- Back
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What are the limited resources?
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Land, labor, enterpenueral ability, capital
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What is the economizing problem?
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How do we take limited resources to fulfill unlimited wants?
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What are the four assumptions to use the Productions Possibilities curve?
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1. Limited to 2 goods
2. Fixed technology 3. Fixed resources 4 Full employment/productive efficiency |
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What does it mean when the point is on the PPC?
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It means it is desirable and obtainable
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What does it mean when the point is outside of the PPC?
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It means that it is desirable but unattainable.
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What does it mean when the curve is shifted to the right?
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Economic growth
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What does it mean when the curve is shifted to the left?
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It means that the production is less productive.
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What are th two types of economic systems?
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Command and market/capitalism
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What are the characteristics of the market system?
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Private property
Role of self interest Competition Specialization Freedom of enterprise and choice Market and prices Use of money Limited government Technology and capital goods |
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What are the 5 fundamental questions of the market system?
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1. What goods and services are produced
2. How will they be produced 3. Who will get goods and services 4. How will system be able to accommodate change and trends? 5. How will they accommodate progress? |
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What is the "Invisible Hand Concept"?
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When the companies are competitive, they are constantly trying to become more efficient. As a result, they inadvertently strive for the good in society.
Ie: More efficient, less waste |
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What is consumption expenditure?
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Payments from the household made for goods and services
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What is revenue?
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Payments made from the household to the business
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What is the definition of a 'market'?
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Mechanisms/intsitution where sellers and buyers come together.
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What is a demand schedule?
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Quantiy demanded at prices
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What is a change in quantity demanded?
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When you move along the demand curve because of a change in price only
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What does the Law of Demand state?
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Price rises, quantity demand falls
Price falls, quantity demand rises |
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What changes when the total demand changes?
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The total determinants
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What causes the change in total Demand/causes the demand curve to shift?
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1. Change in taste
2. Change in prices 3. Change in the number of buyers 4. Change in expectations 5. Change in income |
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What do they mean when they say 'superior' and 'inferior' good?
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Superior means that they are normal goods that you would buy. It has a direct relationship with income. ie: Income goes up, you consume more superior goods.
Inferior good is when the income goes up, then you consume less because it is inferior and you can afford the superior good. |
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What is the market demand curve?
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When you take the sum of all the Demand curves
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What is the law of supply?
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A price lowers, the quantity supply lowers. As price increase, quantity supply increases.
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What would cause a change in total supply?
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1. Changes in resource prices
2. Changes in technology 3. Changes in prices of other goods 4. Changes in expectations 5. Changes in taxes and subsidies 6. Changes in sellers and suppliers |
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What does 'satisfaction' mean?
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Utility
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What does the equilibrium point mean?
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When quantity supplied and quantity demand are equal. There is no waste.
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What does it mean when quantity supplied is greater than quantity demanded?
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There is a surplus.
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What does it mean when quantity demanded is greater than quantity supplied?
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There is a shortage.
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What is the difference between change in quantity supplied and change in supply?
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Change in supply shifts the curve left and right because of determinant.
Change in quantity supplied is the change along the curve because of the change in price. |
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What is the price floor?
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The price set by the government above equilibrium.
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What is the price ceiling?
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The maximum amount that they can charge by the government.
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