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Point A?
Full Employment
Point F?
Inefficient Production
Point G?
Unattainable
Raw materials, water, and building are examples of
Land
Cashier and Truck Driver are examples of
Labor
Truck, tools, and computer are examples of what?
Capital
What is the equilibrium price?
P3
What is the equilibrium quantity?
q3
Law of Demand
Higher the price, lower the demand
Law of Supply
An increase in price results in an increase in supply
If the demand decreases
Price decreases. Quantity decreases.
If demand increases
Price increases. Quantity Increases.
If supply decreases
Price increases. Quantity decreases.
If supply increases
Price decreases. Quantity increases.
Why would a government want to regulate a monopoly?
To prevent exploitation
Adam Smith
when people act in their own self interest in a free market, it leads to better goods fair prices and a stronger economy for everyone
Gary Becker
used social behavior as a premise to determine economic behavior, rational self interest, his research, focused on investments and human capital family, household behavior, crime and punishment and discrimination in markets
John Maynard Keynes
during tough economic times the government should step in and spend money to help boost demand create jobs and get the economy growing again
Milton Friedman
believes in limited government where businesses and individuals make their own choices leading to best results for everyone
The federal budget has a ________ when government increases spending and decreases taxes
deficit
The federal budget has a ________ when the government decreases spending and increases taxes.
surplus
Derived Demand
chain reaction when the demand for one thing depends on the demand for something else
Three Functions of Money
medium of exchange, unit of account, and store value
Medium of Exchange
something people use to buy or sell.
ex: money
Unit Of Account
A way to measure the value of the good
Store of Value
something that keeps it worth overtime
Cost Push Inflation
The cost of making goods goes up so businesses raise prices to cover the higher cost
Demand Pull Inflation
The demand for goods is higher than the supply, causing prices to rise
Note 
Flashcard (86)