How does scarcity affect a family's decision to buy a car?
Forces them to consider trade-offs, like vacation or other expenses.
How does opportunity cost relate to attending a concert?
It's the value of the best alternative activity you forgo.
How does scarcity affect a country with limited oil?
It must make choices about how to use and distribute the resource.
How does entrepreneurship contribute to economic growth?
By combining resources to create new goods and services, fostering innovation.
How does a mixed economy address market failures?
Government intervention can correct externalities and provide public goods.
How does scarcity impact healthcare?
Limited resources require choices about who receives treatment and what services are offered.
How does opportunity cost affect a student's decision to attend college?
It's the income they could have earned working instead.
How does scarcity influence government spending decisions?
Forces choices between funding different programs, like education or defense.
How does trade-off affect a company's decision to produce more of one product rather than another?
Producing more of one product means producing less of another.
How does opportunity cost affect a farmer's decision to plant wheat or corn?
It's the profit they could have earned from the crop they didn't plant.
What does a point inside the PPC indicate?
Inefficient use of resources or unemployment.
What does a point outside the PPC indicate?
Unattainable production with current resources and technology.
What does a shift of the entire PPC outward indicate?
Economic growth due to increased resources or technological advancements.
What does a movement along the PPC represent?
The trade-off between producing two different goods.
What does a PPC bowed out (concave to the origin) indicate?
Increasing opportunity costs as production shifts between goods.
What does a PPC that is a straight line indicate?
Constant opportunity costs as production shifts between goods.
If a technological advancement occurs in only one good, how does the PPC change?
The PPC shifts outward along the axis of the good with the advancement.
How does an increase in labor affect the PPC?
It shifts the PPC outward, allowing for greater production of both goods.
How does a decrease in available resources affect the PPC?
It shifts the PPC inward, reducing the potential production of both goods.
What does the slope of the PPC represent?
The opportunity cost of producing one good in terms of the other.
What is the difference between microeconomics and macroeconomics?
Micro focuses on individual decisions; macro focuses on the entire economy.
Compare a command economy to a market economy.
Command: government control; Market: free interaction of buyers/sellers.
What is the difference between trade-offs and opportunity cost?
Trade-offs are all alternatives forgone; opportunity cost is the *next best* alternative.
Differentiate between physical and human capital.
Physical capital: inanimate resources; human capital: skills and knowledge.
Compare a market economy to a mixed economy.
Market: pure laissez-faire; mixed: some government intervention.
What are the differences between land and capital as factors of production?
Land: natural resources; capital: man-made resources used in production.
Compare a traditional economy to a command economy.
Traditional: based on customs; command: central planning by the government.
What is the difference between scarcity and a shortage?
Scarcity: permanent, limited resources; Shortage: temporary, quantity demanded exceeds quantity supplied.
Compare entrepreneurship to labor as factors of production.
Entrepreneurship: combining resources; labor: skills and abilities of workers.
What is the difference between a trade-off and a budget constraint?
Trade-off: general alternatives; budget constraint: limited income restricting consumption.
