Untitled Flashcards Set

Chapter 6 Study Guide: Introduction to Economics - KEY

Quality of Life is How happy you (citizens) are - a measure of happiness and well-being

Name and Describe the 5 Aspects of Quality of Life:

1. Economic - the standard of living, it includes material aspects of a person or group (house, car, rich, poor etc. 

2. psychological - refers to your mental state (level of happiness, stress, self-esteem, etc.)

3. Political - deals with a person’s rights and freedoms (type of government, rights, etc.)

4. physical - deals with your health and environment (being free of illness, access to clean water, sanitation, etc.)

5. Social - deals with relationships (family & friends)

What is the difference between the 3 E’s?

Economics - the study of the production, distribution and consumption of goods and services

Economy - the resources and processes involved in the production distribution and consumption of goods and services

Economic System - the way a society organizes the production, distribution and consumption of goods and services.

Scarcity: not enough of something - low supply/high demand =(

The basic questions in economics are about how to solve scarcity. The three basic questions to consider when trying to solve problems of scarcity are:

What creates scarcity? 

Identify each of the three factors of production.

Land, Labour and Capital

Describe a scenario where one or more of the factors of production have led to scarcity: 

Land - not enough wood to build a house 

Labour - not enough construction workers to build the house

Capital - the housing company goes bankrupt and is unable to finish building the home

Economic Systems:

Draw and label the Economic Continuum below: (MUST include the three types of economic systems, a description of each, an example country for each and a shift right and shift left)

Describe two economic worldviews of achieving the public good:

1. Cooperation - set aside individual interests to achieve what’s best for society (Equality)

2. Individualism - what’s best for each person individually is what’s best for society.

Supply and Demand:

 - When demand is high and supply is low – price goes_______UP______

 - When demand is low and supply is high – price goes ____DOWN_________

 - When supply and demand are the same – you have what’s called Equilibrium price

    (where price is equal and stays the same)

• Generally producers want to supply as much of a product as consumers will buy at a price that allows producers to make the most profit possible. This tends to make supply, demand and price stable over time

Competition:

• McDonald’s vs. Marble Slab Example – when producers selling the same product try to attract consumers to buy their product (rivalry)

• Competition is usually based on:

• Price

• variety

• quality

• quanity 

• Consumers will buy based on what they value most in a product

• Competition drives a Market and mixed economy

Monopoly:

• Monopolies are the opposite of competition. A monopoly happens when one producer controls all the supply of a product or service

• Monopolies are usually created to: sometimes they exist in mixed and market economies

• provide an essential service (water lines, sewer lines, calgary transit) 

• monopolies are not good in market economies because they prevent competition and individual consumer choice

• monopolies tend to happen in mixed economies and in planned economies, the whole economy is one big monopoly

Government Involvement in Market Economies:

• Sometimes, even in market economies, governments get involved to inform, protect or ensure good practices

• They may intervene especially if they think consumers are not being treated fairly, by ensuring that producers provide:

• labels

• health and safety

• recycling taxes

• ensure competition

• support essential services

Government involvement is often in the form of crown corporations. Give an example of one and why it was created.

Air Canada - provide essential services

PetroCanada - stimulate economic growth

*CBC - promote Canadian content & culture - still a crown corporation

The workers in an economy are also important:

• workers often organize themselves into unions in order to have their needs represented, to their employers

• unions provide a way for workers to act as a group and have their voices heard – collective bargaining

• By organizing workers into groups, unions can pressure employers about wages, working conditions and working hours. 

• Workers can also strike as a way to put pressure on employers to do something

• Unions exist in many parts of the economy – education, healthcare, transportation, forestry. Construction, public service, etc.

• Because of unions, Canada has formed labor laws which is a way the government is involved in the economy