McGrath 2022 Economics Unit 1 Review PDF

McGrath-2022 Economics Name: _______________________________________ Econ Unit 1 Review Key Terms Economics:the social science that studies how individuals, businesses, and governments allocate...

McGrath-2022 Economics Name: _______________________________________ Econ Unit 1 Review Key Terms Economics:the social science that studies how individuals, businesses, and governments allocate scarce resources to produce, distribute, and consume goods and services. Scarcity: the state of being in short supply or insufficient to meet demand. Need: A requirement or necessity for something essential for well-being or survival. Want:the act of having a desire or wish for something, which can encompass both tangible items and intangible experiences. Margin/ “On Margin”:refers to the practice of borrowing funds from a broker to purchase securities, allowing an investor to buy more than they could with just their own capital. Competition: The effort of two or more parties acting independently to secure the business or resources of a third party by offering the most favorable terms. Free Market Economy:an economic system where the production and pricing of goods and services are determined by unrestricted competition between privately owned businesses, with minimal government intervention. McGrath-2022 Economics Centrally Planned Economy: an economic system in which the government makes all major decisions regarding the production and distribution of goods and services. Traditional Economy: an economic system that relies on customs, traditions, and cultural beliefs to guide the production and distribution of goods and services, primarily through subsistence farming, hunting, and gathering. Mixed Economy:an economic system that combines elements of both capitalism and socialism, allowing for private ownership and market mechanisms alongside government intervention to achieve social Regulatory Agencies:government authorities responsible for creating and enforcing rules to ensure safety, fairness, and compliance within specific industries. Redistribution Programs:government initiatives designed to transfer income and wealth from certain groups, typically the more affluent, to those in need, with the aim of reducing economic inequality. Market Failure:an economic situation where the allocation of goods and services is inefficient, leading to suboptimal outcomes for society. Public Good:a commodity or service that is available to all members of society without diminishing its availability to others. Externality:a cost or benefit of an economic activity experienced by an unrelated third party, which is not reflected in the final cost or benefit of a good or service. McGrath-2022 Economics Opportunity Cost: the value of the next best alternative that is forgone when making a decision. “Consumer Sovereignty”:the economic principle that consumers have the ultimate control over what goods and services are produced based on their preferences and demands. Specialization:The process by which an individual or organism becomes highly skilled or adapted in a specific area or function. Market: Ideas to Know Know how to read a PPF and what things shift the curve on a PPF diagram Efficiency and where efficiency is on a graph Factors of Production:The factors of production are the essential resources—land, labor, capital, and entrepreneurship—used to create goods and services in an economy. Types of Market Systems: Traditional Command Market Mixed McGrath-2022 Economics Draw a Circular Flow Diagram: Goals of the Free Market Economy: the primary goal of a free market economy is to efficiently allocate resources through voluntary exchanges driven by supply and demand, fostering innovation and competition while maximizing consumer choice and economic growth. Expectations of a Consumer: Customers expect businesses to provide high-quality products and services, efficient support, and personalized experiences that meet their needs. Advantages/Disadvantages of the FME: Advantage:FME offers a user-friendly graphical interface that simplifies the automation of complex spatial data workflows, significantly reducing manual effort and minimizing operator errors. Disadvantages: While FME is powerful for spatial data processing, it may experience slower performance compared to database-specific ETL tools due to its need to extract and locally process data before rewriting it. Examples of the ways in which Consumer Safety is “guaranteed” in the Mixed Market. In a mixed market, consumer safety is “guaranteed” through a combination of government regulations, industry standards, and consumer advocacy groups that work together to ensure products are safe for public use. McGrath-2022 Economics What is the role of the Government in the Mixed, Centrally Planned, and Free Market Systems? In a Mixed Economy, the government regulates and intervenes in the market to promote social welfare and correct market failures while allowing private enterprise; in a Centrally Planned Economy, the government makes all economic decisions, controlling production and distribution of goods; and in a Free Market System, the government’s role is minimal, primarily ensuring property rights and enforcing contracts while allowing supply and demand to dictate prices. Why is scarcity the primary lesson of an economics class? Scarcity is the primary lesson of an economics class because it teaches us that resources are limited, and we must make choices about how to allocate them effectively How are consumers limited in their interactions with the market? Consumers are limited in their interactions with the market by factors such as income constraints, availability of products, and information asymmetry that can affect their purchasing decisions. How does the Government change the Circular Flow model? What role does the Government have in the system? (Octopus) The government plays a crucial role in the circular flow model by influencing economic activity through taxation, spending, and regulation, which affects both households and businesses. Taxation, Gov spending, regulation, transfer payments, and monetary policy.