Demonstrating Understanding Of Chpter 1-4 Concepts Flashcards Preview

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What is the broken window?

Know why it is bad. It's bad because the mans window is broken because he was vandalized, causing him 2 have to pay for a new window, not the suit he wanted. People said that that could b a good thing because he would b helping the economy. He isn't because he is having to pay for a new window and not the suit he wants. He is putting the worker at a disadvantage and loss of business. Why is it good? SUIT OR THE WINDOW.

1

What is Adam Smith's invisible hand?

Adam smith was the 1st economist. He said 1st yourself (end to a means) and second your selfish desire will help someone (means to an end). He said that when one helps himself out, he is helping out others indirectly and even helping himself. The money goes everywhere.

2

What is the production possibility curve?

(Capitol goods) |_\ (consumer goods) top left= you only produce Capitol goods. (Things that are raw and need 2 b processed and finished. NOT THE finished product.) you have produced 2 many wheat tractors and not enough wheat! Bottom represents Consumer goods= you produced a lot of buy-able and profitable products but you don't have the resources to make the good. Middle not touching the line. Inefficiency (not maximizing our resources).

3

What are the strengths and weaknesses in each different economies?

Tradition-custom making choices based on customs more primitive community or family chooses innovation wouldn't come about family chooses
CALLED TO TAKE DOMINION
Command line – government dictates the market communism man is good anthropology abolish meant of personal belongings government chooses
GOODNESS OF MAN
Market – market sets the price you choose
RESPONSIBILITY GIVES PERSONAL OWNERSHIP
Mixed – politics and government tradition and US choosing monopoly (that's what we have in the US)

4

What is the difference between change in quantity demanded and shift in demand curve?

A shift in demand is what brings a line in and out it has five causes inpet.
(Income,number of people,price of related goods, expectations,tastes and preferences-fads)
And a change in quantity demanded goes down in the price goes up moment slide up and down the line of demand

5

What is the demand curve?

F

6

Calculate the elasticity and inelasticity of demand

(Q2-Q1)/
(Q2+Q1)/
2//
(P2-P1)/
(P2+P1)/
2
Q answer a and b divided by
P answer a and b divided by and then u have your %