p.11
Production Possibility Curve
What is the significance of efficiency in the Production Possibility Curve?
Efficiency ensures that resources are allocated in a way that maximizes output.
What is opportunity cost?
The cost incurred or sacrifice by choosing one option over the next best alternative.
p.22
Market Economy Characteristics
What is the role of government in a market economy?
The government does not involve in decision making.
p.11
Production Possibility Curve
What does it mean for resources to be fully employed in the context of the PPC?
It means that all available resources are being utilized to their fullest potential.
p.3
Basic Economic Problems
What does economics focus on regarding resources?
Allocating limited resources to fulfill the unlimited wants of human beings.
What is opportunity cost?
The cost expressed in terms of the next best alternative sacrificed.
What does opportunity cost show us?
The true cost of decision making.
p.32
Command Economy Characteristics
How can a command economy prevent the production and consumption of demerit goods?
By imposing taxes on them.
p.2
Basic Economic Problems
What is exchange in economic terms?
The act of exchanging money for goods and services.
p.32
Command Economy Characteristics
Who has control over economic management in a command economy?
The government has complete control over economic management.
p.22
Market Economy Characteristics
What is a key characteristic of a market economy regarding resource ownership?
Resources are privately owned.
p.35
Mixed Economy Characteristics
What is the effect of government intervention on the volume of goods produced and consumed?
It influences the volume produced and consumed.
p.24
Market Economy Characteristics
What is a major disadvantage of a market economy regarding public goods?
There is non-production of public goods and under-production of merit goods.
Why does opportunity cost exist?
Due to the scarcity of resources.
p.24
Market Economy Characteristics
What inequality exists in a market economy?
There is inequality in the distribution of income and wealth.
p.24
Market Economy Characteristics
Who influences what should be produced in a market economy?
Those who have the ability to buy the product.
p.7
Positive and Normative Statements
Give an example of a normative statement.
The government should increase tax.
p.33
Command Economy Characteristics
What is a disadvantage of a command economy regarding consumer influence?
Loss of consumer sovereignty; the government decides what is produced, limiting consumer influence.
p.22
Market Economy Characteristics
How are decisions made in a market economy?
Through the forces of demand and supply.
p.2
Basic Economic Problems
What is consumption?
The act of using goods and services to satisfy human wants, such as eating food or reading a book.
p.2
Basic Economic Problems
What does production refer to?
The act of producing goods and services, like cooking food or manufacturing cars.
p.7
Positive and Normative Statements
What do normative statements deal with?
Study of and presentation of policy prescriptions about economics.
p.32
Command Economy Characteristics
How does consumer power in a command economy compare to that in a market economy?
Consumers have far less power to influence production in a command economy.
p.6
Positive and Normative Statements
What distinguishes positive statements from normative statements?
Positive statements can be supported or refuted by evidence, while normative statements are based on opinions.
p.35
Mixed Economy Characteristics
What is one advantage of government intervention in economies?
Redistribution of income to create greater equality in the distribution of income and wealth.
p.23
Market Economy Characteristics
What does competition encourage firms to do in a market economy?
Use the least cost method of production.
p.27
Market Economy Characteristics
What were the five countries with the most economic freedom in 2021?
Taiwan, Hong Kong, Singapore, New Zealand, and Switzerland.
p.10
Production Possibility Curve
What is the assumption regarding the quantity of resources in the PPC?
The quantity of resources is fixed and transferable.
What does opportunity cost refer to?
The value of the next best alternative foregone when making a choice.
p.8
Basic Economic Problems
What does scarcity imply in economics?
Limited resources to meet unlimited wants.
How do economic concepts help in decision-making?
They provide frameworks for analyzing choices and trade-offs.
p.26
Mixed Economy Characteristics
What are public goods?
Goods provided by the government, such as roads, military defenses, and universal healthcare.
p.3
Basic Economic Problems
What is economics?
A social science that studies the behavior of individuals and society in resource allocation.
p.10
Production Possibility Curve
What does the Production Possibility Curve (PPC) assume about the types of goods produced?
Only 2 types of goods are produced.
p.34
Mixed Economy Characteristics
What sectors are present in a mixed economy?
Both public and private sectors.
p.34
Mixed Economy Characteristics
What benefits does a mixed economy provide?
It benefits both private capital and society at large.
p.5
Microeconomics vs Macroeconomics
What does macroeconomics study?
The economy as a whole and its relationship with other economies.
p.28
Market Economy Characteristics
Name two of the top five market economies in 2023.
Hong Kong (China) and Switzerland.
p.8
Basic Economic Problems
Why is choice necessary in economics?
Because of the scarcity of resources.
p.29
Mixed Economy Characteristics
How do the economies of Cuba, China, and North Korea compare to free market economies?
They are closer to a command economy than a free market economy.
p.8
Basic Economic Problems
What are the three fundamental questions of economics?
What to produce? How to produce? For whom to produce?
What are some common issues addressed in economic concepts?
Scarcity, supply and demand, and market equilibrium.
p.6
Positive and Normative Statements
What is the focus of positive statements in economics?
They are concerned with how economies and markets actually work.
p.6
Positive and Normative Statements
Give an example of a positive statement.
GDP will increase by 30% over the next 5 years.
p.23
Market Economy Characteristics
What dictates production in a market economy?
The demands of consumers.
p.21
Types of Economic Systems
What is a Mixed Economy?
An economic system that combines elements of both market and command economies.
What does opportunity cost imply?
Valuing different choices.
p.32
Command Economy Characteristics
What impact does a command economy have on income and wealth distribution?
There is likely to be greater equality in the distribution of income and wealth.
p.25
Market Economy Characteristics
How are goods and services allocated in a market economy?
Through a system of markets and prices.
p.21
Types of Economic Systems
What is a Market Economy?
An economic system where decisions are made based on supply and demand with minimal government intervention.
p.10
Production Possibility Curve
What is assumed about resource employment in the PPC?
Full employment of resources.
p.11
Production Possibility Curve
What does the Production Possibility Curve (PPC) represent?
The maximum output combinations of food and clothing a country can produce when resources are fully employed and used efficiently.
p.27
Mixed Economy Characteristics
What distinguishes some mixed economies from others?
Some mixed economies are freer than others.
p.6
Positive and Normative Statements
How can positive statements be evaluated?
They can be proven to be true or false based on evidence.
What role do economic concepts play in public policy?
They inform policymakers about the potential impacts of decisions.
p.33
Command Economy Characteristics
Why is there less incentive to increase efficiency in a command economy?
Due to the absence of profit motive.
p.21
Types of Economic Systems
What characterizes a Command Economy?
An economic system where the government makes all decisions regarding the production and distribution of goods and services.
p.31
Command Economy Characteristics
What decisions does the government make in a command economy?
What is produced and how resources are allocated.
What is the primary focus of economic concepts?
Understanding how resources are allocated and utilized in society.
p.24
Market Economy Characteristics
How does a market economy affect economic stability?
The economy is often unstable.
p.26
Mixed Economy Characteristics
What are some examples of government intervention in the economy?
Offering subsidies, capping utility prices, and providing public goods.
p.26
Mixed Economy Characteristics
What type of economies do most developed countries have?
Mixed economies, which include elements of both free market and command economies.
p.32
Command Economy Characteristics
What is a stability characteristic of command economies?
They tend to be far more stable than market economies.
p.35
Mixed Economy Characteristics
How do governments modify economic systems?
By placing taxes and subsidies on goods and services to influence their prices.
p.8
Basic Economic Problems
What is the Basic Economic Problem?
Scarcity and the need for choice.
p.31
Command Economy Characteristics
What is a key characteristic of a command economy?
The government makes all economic decisions.
p.26
Mixed Economy Characteristics
Why are pure free-market economies rare?
Because governments usually intervene in the economy through subsidies, price caps, or public goods.
What tools are commonly used in economic analysis?
Graphs, models, and statistical methods.
p.6
Positive and Normative Statements
What type of study does positive economics represent?
The scientific and objective study of economics.
p.29
Mixed Economy Characteristics
What type of economies are Cuba, China, and North Korea examples of?
Mixed economies that are closer to a command economy.
p.34
Mixed Economy Characteristics
What is a mixed economy?
An economic system that combines the merits of both market and planned economies.
p.32
Command Economy Characteristics
What is a key advantage of a command economy regarding public goods?
There is a greater likelihood of both public goods and merit goods being provided.
p.30
Command Economy Characteristics
What is another name for a Command Economy?
Socialism Economy, Centrally Planned Economy, or Communism.
p.30
Command Economy Characteristics
What is a key feature of a Command Economy?
The government makes all economic decisions.
p.2
Basic Economic Problems
What does distribution refer to in economics?
The distribution of goods and services, which may depend on the distribution of national income.
p.4
Microeconomics vs Macroeconomics
What does microeconomics focus on?
Individual markets, firms, households, and their behavior.
p.27
Mixed Economy Characteristics
What type of economies are currently present in the world?
Mixed economies, as there are no purely free-market economies.
p.34
Mixed Economy Characteristics
How does a mixed economy operate?
It allows the market to function while the government intervenes only when the market fails.
p.28
Market Economy Characteristics
What is the Cato Institute's Human Freedom Index used for?
To rank countries based on economic freedom.
p.7
Positive and Normative Statements
What are normative statements often based on?
Opinions on how the market should work.
p.28
Market Economy Characteristics
What are the top five market economies according to the Cato Institute in 2023?
Singapore, Hong Kong (China), Switzerland, New Zealand, and the United States.
