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What are two examples of goods and two examples of services?
What are two examples of goods and two examples of services?
Goods are pens, hats, shoes, etc. Services are housekeeper, nurses, and teachers.
What is an example of the kinds of choices that a business would have to make because of scarcity?
What is an example of the kinds of choices that a business would have to make because of scarcity?
A business will have to decide how much of an item to produce depending on demand.
Use your own words to describe the trade-off known as 'guns or butter'.
Use your own words to describe the trade-off known as 'guns or butter'.
Guns or butter is the economic choice of choosing to produce domestic products or products for the military.
Why does every decision involve a trade-off?
Why does every decision involve a trade-off?
Give an example of physical capital.
Give an example of physical capital.
In your own words, describe what a free market economy is.
In your own words, describe what a free market economy is.
Why do consumers hold such power in a free market system? Give a specific example to support your answer.
Why do consumers hold such power in a free market system? Give a specific example to support your answer.
How does the tradition of free enterprise impact the availability of consumer products?
How does the tradition of free enterprise impact the availability of consumer products?
What kind of person makes a good entrepreneur? List at least two personality traits of a successful entrepreneur.
What kind of person makes a good entrepreneur? List at least two personality traits of a successful entrepreneur.
According to substitution effect, what are consumers likely to do if the price of the leading brand of orange juice increases?
According to substitution effect, what are consumers likely to do if the price of the leading brand of orange juice increases?
Explain how changes in income may affect the demand for goods.
Explain how changes in income may affect the demand for goods.
Equilibrium means 'balance'. What is out of balance when a market is in a state of disequilibrium?
Equilibrium means 'balance'. What is out of balance when a market is in a state of disequilibrium?
What are two factors that can push a market into disequilibrium?
What are two factors that can push a market into disequilibrium?
What are the chief characteristics of a general partnership?
What are the chief characteristics of a general partnership?
Why can corporations exist longer than simple proprietorships or partnerships?
Why can corporations exist longer than simple proprietorships or partnerships?
What is the relationship between the Fed and the treasury?
What is the relationship between the Fed and the treasury?
What is the function of a municipal bond?
What is the function of a municipal bond?
What is the difference between nominal GDP and real GDP?
What is the difference between nominal GDP and real GDP?
How does the CPI affect the rate of inflation?
How does the CPI affect the rate of inflation?
How are progressive, proportional, and regressive taxes similar?
How are progressive, proportional, and regressive taxes similar?
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Study Notes
Goods and Services
- Examples of goods include pens, hats, and shoes.
- Examples of services are housekeepers, nurses, and teachers.
Business Choices and Scarcity
- Businesses must choose how much of a product to produce based on consumer demand due to scarcity.
Economic Trade-off: Guns or Butter
- "Guns or butter" refers to the choice between investing in military goods versus consumer products.
Trade-offs in Decision Making
- Every decision involves a trade-off, requiring the sacrifice of one option for another.
Physical Capital
- Physical capital encompasses tangible assets like buildings, equipment, and computers.
Free Market Economy
- In a free market economy, prices are set by consumer demand and market forces without government intervention.
Consumer Power in Free Markets
- Consumers dictate prices as businesses aim to sell products at the highest prices consumers are willing to pay.
Free Enterprise and Product Availability
- Free enterprise fosters competition, resulting in a greater variety of consumer products and options available.
Characteristics of Successful Entrepreneurs
- Good entrepreneurs typically possess a strong work ethic and decision-making abilities.
Impact of Price Changes on Consumer Behavior
- When the price of a leading brand increases, consumers are likely to switch to alternative drinks or brands.
Income Changes and Demand
- A decrease in income typically leads to lower demand for goods, and an increase in income results in higher demand.
Market Disequilibrium
- Disequilibrium occurs when supply, demand, or prices fluctuate significantly, disrupting balance.
Factors Inducing Disequilibrium
- A shift in either the demand or supply curve can lead to market disequilibrium.
General Partnership Characteristics
- A general partnership consists of two or more individuals engaged in business for profit.
Longevity of Corporations
- Corporations can outlast sole proprietorships and partnerships due to their separate legal status and durability.
Relationship Between the Federal Reserve and Treasury
- The Federal Reserve and the Treasury collaborate to manage government borrowing when cash is needed.
Role of Municipal Bonds
- Municipal bonds are debt obligations that fund infrastructure projects such as schools and highways.
Nominal vs. Real GDP
- Real GDP is adjusted for inflation, while nominal GDP reflects current prices without inflation adjustments.
CPI and Inflation Rate
- The Consumer Price Index (CPI) gauges the average change in prices paid by consumers, affecting inflation rate calculations.
Tax Types Overview
- Progressive, proportional, and regressive taxes differ in structure but share a common purpose of generating tax revenue.
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