Unit 1: Basic Economic Concepts

Physical capital

________- Human- made equipment like machinery as well as buildings, roads, vehicles, and computers.

entire curve

Changes in demand are when the ________ would shift upwards or downwards.

Economic growth

________- The ability to produce a larger total output over time.

price movement

Change in the quantity demanded only occurs due to change in ________ along the curve.

Opportunity cost

________- The value of what was given up.

Demand

________ is the entire line with all of the points that make it up.

Command

________- Consists of the central planning of the economy which differed in different regions of the world depending on the political regime.

inverse impact

The cost of production (land, labor, capital) has a(n) ________ on the supply.

PPC curves

Realistically, ________ are not straight lines and tend to be concave- shaped.

Macroeconomics

________: with ________, we consider the big picture- the nations economy as a whole.

Entrepreneurial ability

________- The effort and know- how to put the other resources together in a productive venture.

Consumer expectation

________ plays a major role in the determination of the price.

Tradition

________- Tied to the evolution of economics, and it is related to subsistence and tribal life.

Increase flexibility

________ by adapting quickly to changing circumstances and being open to new ideas.

Shift

________ in supply is due to the determinants of supply.

equilibrium price

When supply is constant and only demand increases, ________, and quantity increase.

Microeconomics

microeconomics filters our scope to individuals in an economy while keeping the overall economy in mind

Labor

Human effort and talent, physical and mental

Land or natural resources

Any resource created by nature

Physical capital

Human-made equipment like machinery as well as buildings, roads, vehicles, and computers

Entrepreneurial ability

The effort and know-how to put the other resources together in a productive venture

Tradition

Tied to the evolution of economics, and it is related to subsistence and tribal life

Command

Consists of the central planning of the economy which differed in different regions of the world depending on the political regime

Market

Essentially, it is the place in the economy where buyers and sellers perform transactions

Opportunity cost

The value of what was given up

Productive efficiency

When the economy is producing the maximum output for a given level of technology and resources

Allocative efficiency

The economy is producing the optimal mix of goods and services

Optimal

The combination of goods and services that provides the most net benefit to society

Market failure

When a market fails to produce the allocative efficient quantity

Economic growth

The ability to produce a larger total output over time

Economic contraction

It is when a country's economy shrinks due to factors such as reduced spending by consumers, businesses, or the government

Law of demand

Holding all else equal, when the price of good rises, consumers decrease the quantity demanded of that good