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12 Cards in this Set

  • Front
  • Back
Command Economy
economy-central planning used to coordinate most economic activities
Traditional Economy
patterns of past economic activity are repeated to determine what is produced, how its produced, and who gets it.
Market Economy
- markets used to answer the basic economic questions, relying on private decisions of firms and buyers
Consumer Sovreinty
Consumers determine what is produced based on what they buy
Product Markets
households as buyers and firms as sellers of goods and services
Factor Markets
households as sellers of land, labor, capital, entrepreneurship, to firms as buyers of these factors of production
Production Possibilities line or frontere
Graphs showing the potential output in a two good economy, with a given level of resources and technology
Law of increasing opportunity cost
as society produces more of a given good, the opportunity costs for such production increase alongside the increased production.
Consumer Goods
goods intended for use and consumption now. Food, TVs etc
Capital Goods
- goods produced with an intent to use them in future production process, either in consumer or capital goods. Computers, machines, tools, factories.
More investiment in capital goods
better future
PPF breakdown
Scarcity - points outside frontier not attainable
Opportunity cost - to more of one thing, must give up something else
Efficiency - on the PPF, not inside it
Choice - alternative points on PPF
Economic Growth (or decay) shifts in the PPF.