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Economics Final Sides Game Page 1 of review guide Branch of economics concerned with individual firms • microeconomics This exists when resources are limited • scarcity Branch of economics concerned with aggregate supply and demand The next best alternative; given up when deciding to do one thing over another • Opportunity cost “Anywhere” buyers and sellers meet for transactions • markets Government answers economic questions • Command economy Buyers and sellers answer economic questions • market 3 economic questions • What, how, and for whom to produce Best measured by per capita GDP or average income • Standard of living Carrot and sticks • incentives A non-tangible “good” Study of the use of limited resources and unlimited wants and needs • economics Four factors of production • • • • Land- natural resources Labor- workers Capital- man-made (tools and equipment) Entrepreneurship- ideas and risk Page 2 of review guide Ability to out produce= ____ advantage • absolute Ability to produce at lower opportunity cost = ____ advantage • comparative When more of one thing requires less of another • Trade-off When more of one thing does not require less of another • Free lunch See PPF handout See S + D handout Page 3 of review guide A maximum price • ceiling Minimum wage is an example of a • floor Illegal markets that defy price controls • Black markets C + I + G + NX • GDP When real GDP decreases for 6 months, unemployment rises, and spending decreases • recession When GDP is increasing • expansion 16+ working or seeking employment • Labor force Unemployed due to lack of skill or undesirable skill • structural Unemployment due to recession • cyclical Measure of inflation based on price change of a “fixed basket” of goods • CPI Pollution from a factory is an example • Negative externality Increase in customers to surrounding businesses is an example of • Positive externality Largest variable in GDP/Largest sector of the economy • Consumer spending/consumer sector Smallest variable in GDP/Largest sector of the economy • Net Exports/Foreign Page 4 of review guide Owned by stockholders • corporation Most prevalent business type • Sole proprietorship Subject to double taxation • corporation Least common business type • partnership A few firms dominate industry • oligopoly Many firms selling IDENTICAL products • Perfect competition Many firms selling differentiated (but similar)products • Monopolistic competition Give an example of a monopoly • • • • PPL PA wine and spirits Post office DeBeers (back in the day) Page 5 and 6 of review guide • These were recent
