Micro (1)

Government involvement in the economy can lead to waste, lack of responsiveness to market demand, reduced competition, corruption, less economic freedom, and potential misalignment with public interests.

An economic system where private individuals and businesses own and control resources, and economic decisions are primarily determined by market forces.

An economic system where the government controls most resources and production, directing economic activity through central planning.

An economic system that combines elements of both free market and planned economies, often allowing private ownership and regulation by the government to varying degrees.

A model depicting the continuous flow of resources, goods, services, payments, savings, and investments between different economic sectors (households, firms, government, banks).

Factors that remove money from the circular flow of income, such as savings, taxes, and imports.

Factors that add money to the circular flow of income, such as investment, government spending, and exports.

Increased efficiency, production, innovation, adaptability, consumer choice, and competition are inherent to market economies.

Market economies face potential issues with the production of harmful goods, underprovision of beneficial goods (merits goods), overconsumption of resources, market dominance by larger firms, and a lack of government intervention.

Economic systems with government control can potentially address issues like inequality and unemployment and direct resources toward specified goals.

The fundamental economic problem of unlimited wants and needs exceeding the available resources to satisfy them.

The value of the next best alternative forgone when making a choice.

A graph that shows the various combinations of outputs an economy can produce given its available resources and technology.

The difference between the price a consumer is willing to pay and the actual price they pay.

The difference between the price a producer receives and the minimum price they are willing to accept.

A state where the quantity supplied equals the quantity demanded at a certain price.

A government-imposed limit on how high a price can be charged for a good or service.

Measures the responsiveness of quantity demanded to a change in price.

Measures the responsiveness of quantity supplied to a change in price.

Measures the responsiveness of quantity demanded to a change in consumer income.

Goods for which demand increases as consumer income increases.

Goods for which demand decreases as consumer income increases.