Econ

Factors of Production

The resources used to produce goods and services: land, labor, capital, and entrepreneurship.

Physical Capital

The man-made goods (machines, tools, buildings) used to produce other goods and services.

Human Capital

The skills, knowledge, and experience possessed by an individual or workforce.

Trade-off

The concept that choosing one option means giving up another.

Opportunity Cost

The value of the next best alternative that is forgone when making a decision.

Entrepreneurship

The ability to start and manage a business, taking on financial risks to innovate and create goods and services.

Specialization

The focus on a particular task or product to increase efficiency and productivity.

GDP (Gross Domestic Product)

The total value of all goods and services produced in a country within a specific time period.

Centrally Planned (Command) Economy

An economic system where the government makes all economic decisions and controls resources.

Mixed Economy

A system combining elements of both free markets and government control.

Free Market

An economic system in which supply and demand determine prices with minimal government intervention.

Economic Goals of Society (5)

Efficiency, freedom, security, equity, and growth.

Monopoly

A market structure where a single seller dominates, controlling prices and supply.

Barriers to Entry

Obstacles that make it difficult for new competitors to enter a market (e.g., high startup costs, regulations, patents).

Oligopoly

A market structure where a few large firms dominate an industry.

Collusion

An agreement among firms in an oligopoly to set prices or production levels to reduce competition.

Perfect Competition

A market structure where many buyers and sellers exist, with no single entity controlling prices.

Globalization

The increasing interconnectedness of economies, cultures, and trade across nations.

What are the advantages and disadvantages of globalization

Advantages include increased trade, access to markets, and cultural exchange, while disadvantages may involve job displacement, environmental degradation, and the loss of local cultures.

Supply

The quantity of a good or service that producers are willing and able to offer at different price levels.

Demand

The quantity of a good or service that consumers are willing and able to purchase at different price levels.

Equilibrium

The point where supply and demand intersect, determining the market price and quantity.

Absolute Advantage

When a country or individual can produce a good more efficiently than others.

Comparative Advantage

When a country or individual can produce a good at a lower opportunity cost than others.

The Three Key Economic Questions

What to Goods or services should be produced? How to produce the goods/services? who consumes the goods/services?

Why do nations trade and what is the impact

Nations trade to benefit from comparative advantages, accessing goods and services more efficiently. This trade promotes economic growth and specialization, leading to improved efficiency and consumer choice.

What is GDP and why is it important to the economy

Gross Domestic Product (GDP) measures the total value of all goods and services produced in a country, it serves as a key indicator of a country's economic performance, guiding policy decisions and investments.

What factors influence supply and demand

• Demand Shifters: Income, consumer preferences, prices of related goods, future expectations, population changes.

• Supply Shifters: Production costs, technology, number of sellers, government policies, future expectations.

scarcity vs shortage

Scarcity: the limited nature of resources

shortage: demand exceeds supply at a given price.

Describe the law of demand and supply. How do these laws interact with each other?

• Law of Demand: As prices decrease, demand increases, and vice versa.

• Law of Supply: As prices increase, supply increases, and vice versa.

• Interaction: They determine market equilibrium, where quantity supplied equals quantity demanded