ECNOM 1

Curved PPF Graph represents…

an Increasing opportunity cost —> one product will be valued and made over another product despite using the same material —> represents the tradeoff given the amount of limited materials

Straight PPF graph represents…

Constant opportunity cost —> both products are valued the same and use the same amount of material —> little/none trade off since demand for each product will always remain relatively similar

Land

All things supplied by nature and used in the production of goods/services

ex. farmland, forests, seas

Labor

the human effort which goes into the production of goods/services

ex. a job.. craftsman… carpenter…

Capital

anything made by man and used to produced goods/services

ex. products… buildings… services.. if it is paid for.. it is capital

Entrepreneurship

Connecting and organizing land, labor and capital

Nash equilibrium

Nash equilibrium is when people will not deviate from their original strategy (betraying) because even if they know what other people are thinking, their main strategy (betraying) still is the best outcome for them individually.

traditional economy

typically represented by bartering/trading goods and services.. it creates consistent roles, customs, and beliefs. 
(+) Gives everyone a place and a stable job 

(-) No need for innovation, lower standards b/c no competition, everything is slow

Command Economy

when government/ central authority controls the means of production 

• (+) short turnover, basic things are cheap for consumers.. sometimes at no cost 

• (-) doesn’t meet incentives or consumer demands, no individuality, not a lot of innovation/slow to change b/c of bureaucracy 
  

Market Economy

where investment, production, and distribution are based on supply and demand 

• (+) adapts to change, freedom, variety of products, consumer satisfaction

• (-) rewards only productive goods, competition, not a lot of affordable/public goods, market failures