Econmics Final Study Guide

Scarcity

Having unlimited human wants but limited resources - forces trade with labor and raw materials

Markets

A system that is characterized by free trade and competition - private property and minimal government interferes

Choices

How to allocate scarce resources to satisfy human wants and needs

Alternatives

Systems beyond mainstream capitalism focusing on balance and well-being

Efficiency

Usin scarce resources to maximize overall welfare, minimizing waste, and ensuing resources are distributed to serve individuals

Equity

Fairness in distributing resources, oppurtunities, and outcomes, focusing on justice rather than just equal amounts

Incencitives

rewards and penalties that motivate individuals, businesses, or government to act in specific ways, influencing decisions on spending, wokrin, or producing

Command Economy

central overnment makes all key decisions about production, distribution, and pricin of goods and services

Oppurtunity Cost

the value of the best alternative you give up when making a choice - highlightin the trade-off due to scarce resources

Market Economy

Tcompetition and free trade where private property and minimal government interference play crucial roles

Broad social and economics goals

Utility

satisfaction, usefulness, or value a consumer gets from consuming a good or service, representing happiness

Costs and Benefits

Costs is what you have to give up, while benefits are the gains/advantages

Broad social and economical goals

security, growth, efficiency, equity, stability, freedom

security, growth, efficiency, equity, stability, freedom

Law of Supply

price of a good or service increases, the quantity producers are willing to supply also increases

change in quantity supplied

sellers decide to produce and sell when only the price of the product changes

Law of demand

price of a good or service increases, people usually buy less of it. When the price decreases, people usually buy more

Change in quantity demanded

only when the price of the good itself changes

Shifters of demand

STORES: Sustitutes, tastes, other goods, resources, expectations, size of markets

Shifters of Demand

TOEISS: Technology, other related goods, expecations, income, size of the market, seasons

Market Equilibrium

The middle ground of supply and demand - quantity demand and supply meet

Factors of production

land, labor, capital, entrepreneurship which combine to drive the economic output and growth

Diminishing Marginal Utility

that each additional unit of a good or service given provides less and less happines by each thing

Equity vs. Efficiency Issues

efficiency means maximizing scarce resources while equality concerns with the fairness of how these resources are given out and distributed among the people

Price Control (price ceilings and price floors)

price controls are government-mandated limits on how high or low the price of a cervice can be instead of sipply and demands

Price elasticity vs. Price Inelasticity

price elastic demand means quantity demanded changes with price while police inelastic demancs mean quantity demanded changed little depsite price shifts

Gross Domestic Product

GDP: total economic outcome produced within a country’s border over a specific time period

Inflation

broad increase of general price level of goods and services in an economy over time

Unemployment

individuals who are unemployed actively seeking work and available to work but cannot find a job

Natural rate of employment

lowest sustainable unemployment level for a healthy economy