econ final

it would be wiser to read through the handouts

oppurtunity cost

the potential loss of gain of one option when another is chosen (the thing you are willing to give up)

what are trade-offs and how does opportunity cost the value of the next best alternative?

trade-off: giving up one thing in favor of another; opportunity cost helpes judge which would be a better choice

Adam Smith’s invisible hand

the idea that People acting in their own self-interest can actually improve society because the economy adjusts to the needs of everyone

market driven by self interest and competition

people will want what is best for themselves, and whoever can provide that at best quality/lowest price gets ahead, causing competition

marginalism

how people make decisions based on the cost of adding one more unit of something (buy one get one free)

defining characteristics of government-controlled economies

the government regulates/controls the economy, potentially advancing the country, but cannot always have the individual citizens’ best interests in mind

Human Development Index (HDI)

measurement of human development based on a country’s average achievements on knowledge, health, and standard living

(ex: college dude vs person living in Cambodia)

how does life expectancy, education, and income effect economics

The shorter the people live, the fewer workers a country will have.

if the people are uneducated, they have a limited amount of knowledge that they can contribute to the workforce

If the people cannot earn enough to meet their basic needs, they cannot earn enough to keep the economy afloat

Traditional economy

an economy that is run based off of tradition/customs rather than what is the most efficient/earns the most money

command economy

an economy that is run by the government

Origins of economics

greek word “oikonomia” meaning stewardship

mercantilism

the idea that a country’s power depended on how much gold and silver it had

Characteristics of socialism

aims for a more equitable distribution of wealth through collective ownership or government control

It can be either democratic or government-controlled. (ex: Sweden vs China)

What does Keynesian economics do during recessions (boosting aggregate demand)

it encourages the government to put money back into the economy to boost demand

scarcity & choice

scarcity- the idea that there aren’t enough resources to meet everyone’s wants/needs, so people must make choices based on how to best use what they have

how does scarcity force economies to determine what, how, and for whom to produce?

since the economy doesn’t have enough for have everything, they must determine what to produce based on what is best for the economy

compare traditional economy & mixed economy

both are “run by the people”

fiscal policy

government spending and taxes to influence the economy

monetary policy

the government controlling interest rates and the amount of money in circulation.

GDP

the value of the finished domestic goods and services produced within a nation's borders

GNP

the value of all finished goods and services produced by a country's citizens, both domestically and abroad

Fair trade

when a country produces something in the name of helping the workers, but the only customers are people from outside the country buying products in the name of charity/ethics

how does exploitation in production relates to income inequality

people can be paid less for something made bc all the money is going to the owners & shareholders of the company

why do black markets exist and how can they affect the legal economy

they exist for a variety of reasons (desire for anonymity, illegal goods, avoiding taxes, etc)

it can effect the economy bc the legal economy gets thrown out of balance by un-taxed/ an unregulated influx of goods

How does equilibrium price adjust with changes in demand or supply

the equilibrium price may go up or down depending on whether or not there are enough goods.

what is elasticity?

elasticity measures what happens to a good when its price goes up or down

how does education, infrastructure, and investments contribute to economic development?

more education = more/better opportunities for the country’s citizens to advance the economy

more infrastructure allows for more production

more investments = more money/stability