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What is the basic problem in economics?
scarcity
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What does it mean to have scarce resources?
unlimited wants and limited desires
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What are the four factors of production?
- land
- labor
- capital
- entrepreneurs
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Give five examples of land?
natural gas, soil, water, trees
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Give 3 examples of labor?
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What are captial goods?
goods that you need to make other goods
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What are some strategies for allocation of resources?
- Add taxes
- prohibit use
- leave things the way they are
- raise prices for everyone
- markets and price system
- democratically
- lottery
- first come first serve
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Why does an entrepreneur go into business?
to make a profit
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What is meant by opportunity cost?
- the cost of what you gave up in your choice
- cost of the second best thing
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Why does every decision have an opportunity cost?
you always have choices, and everything has a price
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What are tradeoffs?
alternative choices
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How do you make a rational decision?
paced
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What does paced stand for?
- p- problem
- a- alternatives
- c- criteria
- e- evaluate
- d- decide
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What are criteria?
things that matter to you in a decision
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How do people and businesses specialize?
certain people do certain tasks
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Why does specialization increase productivity?
- makes the best use of a particular worker's skill
- decreases time it takes
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Why do people want to enagage in voluntary, non fradulant exchange?
comparative advantage- you can produce it at a lower opportunity cost
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What are the 3 basic economic questions?
- What to produce
- how to produce it
- who gets the product
- (how many to produce)
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Why must economic systems answer the 3 basic questions?
to function
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What is a public good? Why does the govt provide them?
- a commodity or service that is provided without profit to all members of a society
- no one else will
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What are the economic functions of government? give examples of each
- To provide the legal and social framework- lawsuits
- establish a monetary system- federal reserve
- maintain competition- anti-trust laws
- providing public goods and services-highways, national defese
- correct for extranalites- hurricanes, recalls
- stablize the economy- reduce unemployment, control inflation
- resdistribute income- medicare, free lunch
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What are the broad social goals of government?
- economic freedom
- economic efficancy
- economic equity
- economic growth
- economic stablitity
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What happens when a government regulates industry?
- they tell it what it can and cant do
- can decrease productivity
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Why would a government deregulate an industry?
to let people do things the way they want
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What does a ppf or ppc show?
efficiency
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What does a production possibility shedule show?
possibilities and opportunity cost
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On a ppf curve where is 100% efficancy? what happens to the left of curve? to the right?
- on the line
- wasting resources
- not sustainable
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What is productivity?
how efficiently are you using your resources
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How can new equipment and tech. add to the growth of an econ?
increase productivity and effiecnecy
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How can your investment in a higher education help you have a higher standard of living?
- you are specialized
- make more money
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What is meant by standard of living?
the degree of wealth and material comfort available to a person or community
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What might happen if gov invests in the health, education, and training of citizens?
- increase productivity
- improve standard of living
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