Unit 1 Economics Test Review For Test

Define a PPC Curve

A popular model used to illustrate the concept of opportunity cost

Frontier

The maximum combination of two goods or services an economy can produce

What is the significance of a point on the Curve

Efficient Use of Resources

What is the significance of a point inside and outside of the Curve?

Inefficient use of resources and impossible combination

What is a trade-off?

Since resources can be used for one purpose at a time, choices must be made

What is an opportunity cost?

When a decision is made between alternatives, something must be given up.

What is scarcity?

Limited resources vs. Society's unlimited wants

Movement Away from Axis

Increase in technology, Decrease in cost of resources, and Increased availability of resources

Movement Into Axis

Increase of government regulation/tax, Increase cost of resources, and Decreased availability of Resources

Define and Give and Example of Product Market

The flow of Goods and Services from a Business to HouseHolds (Buying lunch at Whataburger)

Define and Give and Example of Factor Market

The flow of Resources from Households to Business (Going to work for Dell in exchange for income)

What is the Circular Flow Model

Shows the movement of money, goods, resources, and the services between households and businesses within an economy

Government Spending (Inflow/Outflow)

Sum of money spent by government on goods and services to meet a certain peoples needs

What is a "firm" ( Inflow/Outflow)

Provides goods and services in exchange for payments (Inflow is money entering a business and Outflow is money leaving the business)

Resource Owner (inflow and outflow)

Provides productive services to businesses in exchange for income

International Market (inflow and outflow)

Goods, services, and capital exchanged across the world

Financial Institutions (inflow and outflow)

Organizations that provide financial services to individuals, businesses, and governments.

Land/ Labor/ Capital/Technology/ Entrepreneurship

(Define and give an Example of all 5)

Land:

ALL Natural Resources (Plants, Water, Oxygen)

Labor:

Any human effort extended towards Production (Miners, Factory Workers, and Sales People)

Capital:

Any Good that is used to further Production (Factories, Machines, Tools)

Technology:

Anything that makes production (Faster, Easier and Cheaper)

Entrepreneurship:

The risk-taking, coordinating resource (People and Ideas that produce Goods and Services

Capital vs. Consumer good (define and give an example of each) ((Capital:))

Any Good that is used to further Production (Machines used to make sporting equipment)

Consumer Goods:

Final products purchased by individuals for personal use or consumption. (Buying a Iphone at Apple)

3 basic economic questions

What is going to be produced, How is it going to be produced, Who is it going to be produced for

Tribal/Traditional system

System based on Survival, not for progress

Market Economy

Voluntary Exchange between buyers and sellers

Mixed Economy

A combination of at least 2 economic systems

Command/Planned Economy

System where collective says how wants will be satisfied

List and Define the Economic Goals ((Economic Freedom:))

the ability of individuals and businesses to make their own choices about what to produce, how to produce it, and who it is produced for, with minimal government interference.

Economic Efficiency:

the optimal use of society's scarce resources to produce goods and services, minimizing waste and the optimal use of society's scarce resources to produce goods and services, minimizing waste and maximizing overall benefit or social welfare.

Economic Equity:

is the fairness in the distribution of economic resources, opportunities, and outcomes within a society

Economic Security:

an entity's (individual, household, or nation) ability to meet essential needs consistently and with dignity, both now and in the future.

Fully Employment:

the condition in which virtually all who are able and willing to work are employed.

Price Stability:

is a economy where prices aren't changing rapidly or much at all. This means very low inflation if any at all. It maintains the purchasing power for the currency.

Economic Growth:

the increase in a country's production of goods and services, measured as an increase in real GDP or real GDP per capita over time is economic growth.