Econ Unit 1 Review

limited amounts of resources to meet unlimited wants and needs

scarcity

scarcity implies that people and societies must

choose

economics is the study of how societies decide how to use

limited resources

the value of the next-best alternative that must be given up to attain something is called the

opportunity cost

name the four economic systems studied by economists

mixed, free market, centrally planned, traditional

true or false: in economics, money is not considered capital

true

according to adam smith, self-interest and competition acct as an _____________ in regulating the free market

invisible hand

in the circular flow model, goods and serves are brought and sold in the

product market

"hands off" economic policy which means "let them do as they please"

laissez faire

the set of acquired skills and abilities that workers bring to the production of goods

human capital

One item that extrastan can produce

corndogs

another item that extrastan can produce

bicycles

what is the maximum number of bicycles that extrastan can produce

16

what is the maximum number of corndogs that extrastan can produce

100

an inefficient use of resources is shown as a point of

underutilization

list one combo of items that extrastan can produce

90,4

list another combo of items that extrastan can produce

12,50

situation in which the market, on its own, does not distribute resources

market failure

a government produced resource shared by all consumers

public good

the part of the economy that involves the transactions of the government

public sector

the part of the economy that involves the transactions of individuals and businesses

private sector

someone who would not choose to pay for a certain good or service, but gets the benefits of it anyway

free rider

side effect of creating public goods that generates benefits or costs to someone other than the person deciding how much to produce or consume

externality

side effect that generates benefits to people

positive externality

side effect that generates costs (drawbacks) to people

negative externality

when determining what to produce as a public good, the government must determine both the __________ and ___________ of producing that good

cost, benefits

older products, processes, and workers become out of date

obsolescence

income level below which income is insufficient to support families or households

poverty threshold

right of a government to take private property for public use

eminent domain

the study of economic behavior and decision making of small units, such as individuals and families

microeconomics

the concerns of the public as a whole

public interest

laws requiring companies to give consumers full information about their products

public disclosure laws

general term that refers to government aid for the poor

welfare

basic facilities that are necessary for a society and economy to function efficiently and grow

infrastructure

the study of the behavior and decision making of entire economics

macroeconomics

a private organization that tries to persuade public officials to act or vote according to their interests

interest group